DeFi protocol Pendle has introduced a dynamic fee model for its PT Looping tool, which automates leverage strategies for Principal Tokens. The new structure replaces a previous flat fee of 5 basis points on total notional assets.
The updated formula calculates fees based on approximately 10% of the projected yield from a loop, with a maximum cap set at 10 basis points or 0.10%. This change is designed to reduce costs for users, particularly for short-duration or lower-yield positions.
PT Looping automates a strategy involving holding Principal Tokens, borrowing against them on platforms like Aave or Morpho, and reinvesting the funds. This process consolidates multiple manual transactions into a single automated workflow.
In August 2026, the protocol implemented incentive programs offering a 2% APY boost for users, while increasing pool caps to $15 million for specific opportunities. The fee adjustment was officially announced on September 18, 2026.
