Using Pendle PT-AUSD as Collateral on Curvance

Why this matters for institutional readers

Collateral quality comes down to how predictable an asset’s value is. A principal token has a defined redemption path to a known date, which gives a treasury or a fund a cleaner way to reason about borrowing capacity than a freely floating asset does. PT-AUSD pairs that structure with a stablecoin backed by cash and Treasuries. It behaves more like a short-dated bond than a spot crypto position.

What a Pendle PT is

Pendle takes a yield-bearing token, wraps it into a standardized form, and splits that into two tokens: a Principal Token (PT) and a Yield Token (YT). The PT holds the principal; the YT holds the future yield. (Pendle documentation)

A PT behaves like a zero-coupon bond. Because its yield has been stripped out and sold separately, the PT trades below the value of its accounting asset and climbs back toward par as maturity approaches. That gap between the discounted price and the redemption value is the fixed yield. Pay $0.96 today for something redeemable for $1 later, hold to maturity, and the $0.04 is your return.

One detail matters for accuracy. A PT redeems 1:1 for its accounting asset (the asset named in brackets), not always the underlying token. For reward-bearing assets the two differ. For PT-AUSD the accounting asset is AUSD itself, so one PT-AUSD redeems for one AUSD at maturity. PT holders also give up the variable yield and any points from the underlying; those go to the YT side.

What PT-AUSD is

AUSD is Agora’s dollar stablecoin, backed 1:1 by cash, short-term U.S. Treasuries, and overnight repo and reverse repo, with the reserve fund custodied and administered by State Street and managed by VanEck. (Agora) It is already live on Monad, where Curvance runs.

PT-AUSD is the principal token built on AUSD. You buy it for less than a dollar and redeem it for one AUSD when the term ends. The maturity value is known from the start, which is what gives the token a predictable profile to borrow against.

Why a principal token works as collateral

In lending, the question behind every collateral decision is the same: how confident can the protocol be about what this asset will be worth if it has to be sold? A PT answers that better than most assets. Its price converges toward a fixed redemption value on a fixed date, so the band of likely outcomes narrows as the term runs down.

This is why principal tokens are already used as collateral on Morpho, Silo, and Euler. (Pendle documentation) Curvance is not introducing the idea. It is bringing PT collateral to Monad inside an architecture built for capital-efficient lending, with isolated market parameters. (Curvance docs)

The predictable redemption path removes one common source of liquidation pressure: collateral drifting on sentiment alone. It does not remove all of it. Price still moves before maturity, and that is covered in the risk section below.

What you can do with PT-AUSD on Curvance

Deposit PT-AUSD as collateral, then borrow supported assets against it. The PT stays in your position and continues pulling toward its maturity value while you deploy the borrowed liquidity elsewhere.

That opens a few uses:

Borrow without unwinding. Access liquidity before maturity instead of selling the PT and giving up the fixed-yield position.
Loop the position. Curvance builds leveraged positions in a single transaction, so a PT-AUSD holder can size exposure up without the manual deposit-borrow-repeat cycle. (Curvance docs)
Rebalance or fund other strategies while the PT-AUSD collateral continues to hold its redemption claim.

Fixed-yield collateral that can also be borrowed against is a different primitive from holding a PT to maturity and nothing else.

A worked example

The numbers below are illustrative. Use the live figures on the PT-AUSD market page and Curvance’s actual loan-to-value cap before sizing anything.

Say PT-AUSD trades at $0.97 with 90 days left, redeemable for 1 AUSD. Pendle quotes a compounded fixed yield, so the annualized figure is:

Fixed yield = (redemption / price)^(365 / days) − 1

= (1 / 0.97)^(365 / 90) − 1

≈ 1.0309^4.06 − 1

≈ 13.1% annualized

Deposit $10,000 of PT-AUSD as collateral. At an illustrative 95% LTV, that supports up to $9,500 of borrow.

The PT-AUSD keeps pulling toward its $10,309 redemption value over the 90 days, regardless of what you do with the borrowed funds, as long as the position stays inside the market’s liquidation parameters.

If the borrowed amount is used to add more PT-AUSD, the looped return follows the standard relationship: net yield rises with leverage, but so does borrow cost and liquidation sensitivity. At 95% LTV, the position has much less room for adverse price movement, borrow-rate changes, or collateral parameter adjustments, so the spread between the PT’s fixed yield and the borrow APR needs to be checked carefully against live rates, not against this example.

The risks

Predictable does not mean risk-free. Each of these applies to a PT-AUSD position on Curvance, and a borrower should track all of them.

Pre-maturity price. A PT can trade below or above its expected convergence value before the term ends. A move down can push a borrow position into liquidation before redemption ever happens.
Liquidation. If the position breaches the market’s parameters, the collateral is closed to repay the debt. The redemption date does not protect a position that is underwater today.
Oracle. PT pricing depends on the market’s oracle.
Smart contract. Pendle, Curvance, and AUSD each add contract surface to the position.
Depeg. AUSD is fiat-backed but not guaranteed. A depeg lowers the dollar value of the redemption claim.
Maturity and liquidity. PT behavior and on-chain liquidity can change as maturity nears, and borrow APR can move against the position.

Who this is for

PT-AUSD collateral suits holders who want liquidity from a fixed-yield position without unwinding it, and treasuries or funds that prefer collateral with a defined maturity value over a freely floating one. It is a poor fit for anyone who cannot monitor liquidation thresholds, borrow rates, and the maturity timeline. A borrow position is not a hold-to-maturity position; it needs attention.

Getting started

PT-AUSD is live now. Deposit it on app.curvance.com, confirm the market’s current LTV cap and maturity date, and size the borrow against live rates. For the protocol mechanics behind the market, see the Curvance lending documentation.

By Tom Nave, Marketing, Curvance. Published June 27th