Unwinding Pendle positions with expired Principal Tokens

Closing or repaying a Pendle position on DeFi Saver is functionally the same as with other collateral, in terms of the steps you need to take. However, if the Principal Tokens have expired (reached maturity), the steps taken within the close/repay recipe differ.

Expired tokens can't be sold off (swapped), and must first be redeemed on Pendle. Another factor is how the unstaking process for the underlying asset works.

For example, Ethereal's eUSDe can be instantly redeemed for USDe. On the other hand, Ethena's sUSDe requires a 7-day waiting period before it's redeemed for USDe As such, if the unstaking window is instant, our recipe will also unstake the PT's yield-bearing asset and then swap the underlying stablecoin for the debt asset. If the unstaking window is not instant, our recipe will only redeem the PT for the yield-bearing asset, and then swap that for the debt asset. Seeing as this is not a stablecoin asset being swapped for a stablecoin - it can experience more significant slippage and trade size impact one a lot of selling pressure kicks in on maturity.

As such, when executing a Close or Repay for Pendle positions with expired PTs, the recipe will:

1. Redeem the Principal Token on Pendle.

2. If the yield-bearing asset is instantly withdrawn on its original protocol, then the underlying asset is swapped for the debt asset (eUSDe unstaked for USDe, and swapped into USDC, for example)

3. If the yield-bearing asset is not instantly withdrawn from its original protocol, then the yield-bearing asset is swapped for the debt asset (sUSDe is directly swapped into USDC, for example)

4. The debt is repaid with the debt asset.

This provides users with positions that have expired PTs a time and cost-efficient way of unwinding their position in a single transaction.

How to unwind a Pendle position with expired PTs:

The first step would be navigating to your PT position on DeFi Saver. You can do this by either clicking on the position from the "Portfolio" page, or navigating to the Aave dashboard from the sidebar:

Repay

To repay, simply navigate to your position and locate the "Repay" option.

From there, you can input how much of your position you'd like to repay.

You can review the slippage settings, and if everything checks out, click on Repay.

You'll also be able to see a preview of your position's stats before executing the Repay based on the amount you input.

Close

To close your Aave PT position, navigate to the position and locate the "Close" button.

From there, you'll be able to adjust the slippage settings and exchange route before submitting the transaction. Along with that, you can choose how you'd like for the position to be closed:

• Using the debt asset from your wallet to pay off the debt.

• Swapping part of the collateral to clear the debt, and receiving the remaining collateral asset to your wallet.

• Swapping the entirity of your collateral to clear the debt, and receiving the remaining debt asset to your wallet.

Additionally, you'll see how much you'll end up receiving. If everything checks out, click "Close Aave".

If you're unsure which option to choose when closing, consider the following:

• Choosing "Close to PT" means only the amount of collateral needed to clear the debt will be swapped. This means the lowest possible amount will be impacted by slippage and TSI

• Choosing "Close to debt asset" means the full collateral amount will be swapped into the debt asset. This means a larger amount will be impacted by slippage and TSI

• Closing to PT leaves the remaining PT in your wallet, meaning you can still remain in the Pendle ecosystem or the ecosystem of the underyling asset (since you'll be able to redeem the PT directly)

• Closing to the debt asset will provide you with instant liquidity in your wallet if your goal is to have funds to spend instead of remaining in the Pendle ecosystem

Currently, both the Close and Repay features have 0% fees from DeFi Saver.

Using Close/Repay in order to rollover PT positions

When performing a rollover for a PT position on DeFi Saver, both the expired PT position, and the position with new PTs will need to have an activated E-Mode.

However, the Max LTV of the new PTs E-Mode is lower than the one for the expired token. As such, users would need to perform a small Repay of their position in order to fit with the new position's Max LTV.

If you're interested in doing a rollover, you can learn about the steps in detail on the Pendle PT Rollover article.

Utilizing Collateral switch

Rollover might not be available if the supply cap of the PT you'd like to roll over into is filled, and the sell pressure on Closing/Repaying could lead to significant losses on slippage/trade size impact.

In these cases, you still have the option of using Collateral switch to unwrap your PT with a yield-bearing asset into the yield bearing asset itself (for example, PT sUSDe into sUSDe) This solution allows you to keep earning yield on the yield-bearing asset (as opposed to earning none with an expired PT). It also puts users in a position where they can wait for the supply caps on the next PT to open up, after which they can utilize collateral switch once more to move into the new PT. Essentially, performing a delayed rollover.