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Prerequisites: What is ArcX?, familiarity with Pendle basics

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Quick Mapping

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The Big Difference

The biggest difference is in what gets separated. Pendle splits a position into:
  • PT = principal
  • YT = interest + rewards
ArcX splits a position into:
  • ST = principal + interest
  • EPT = rewards side
ArcX isolates the rewards side into EPT, so EPT buyers do not need to pay for yield exposure they do not want. That gives EPT buyers higher leverage for the same capital.

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Example

Ignoring the time value of capital and the cost of having capital locked until maturity, the comparison looks like this: Assume a strategy generates:
  • 5% APR
  • 1 point for every $100 in the strategy
  • 1 year to maturity
  • points priced at $0.20 per point
In Pendle, the buyer is buying interest + rewards together through YT. To get exposure to 1 expected point reward, they are also paying for the yield stream:
  • Yield value: $5.00
  • Point value: $0.20
  • Total paid = $5.20
In ArcX, the EPT buyer is only buying the rewards side:
  • Point value: $0.20
  • Total paid = $0.20
So for the same capital, ArcX lets an EPT buyer get more concentrated expected-reward exposure because they are not paying for the yield component.

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When to Use Which