Integrating Pendle PT Tokens

Integrating Pendle Principal Tokens (PT) into an IPOR Fusion vault enables fixed-yield strategies. However, because PTs are yield-bearing assets with unique pricing and maturity mechanics, Atomists must follow a specific configuration workflow to ensure the vault correctly accounts for these assets.

This guide covers the three pillars of PT integration: Tracking, Valuation, and Execution.

1. Asset Tracking

By default, a Fusion Vault only "sees" the assets explicitly defined in its configuration. If an Alpha strategist swaps vault collateral for a Pendle PT, the asset will not appear in the vault's balance or the UI unless it is registered.

Adding Tracked Assets

Atomists must add the specific PT ERC20 address to the Tracked Assets list.

• Why: This ensures the vault's totalAssets() logic includes the PT balance.

• Action: Use the PlasmaVaultGovernance interface to add the PT contract address to the vault’s tracked ERC20 tokens (Market ID 7).

2. Valuation (Price Oracles)

Pendle PT tokens are not typically supported by standard Chainlink price feeds. Without a valid price feed, the vault cannot calculate its Total Value Locked (TVL) or the share price, often leading to a "0.00" display or transaction reverts.

Custom Price Feeds

Atomists must configure a Custom Price Feed via the PriceOracleMiddleware.

• Mechanism: PT tokens should be priced based on the underlying Pendle Market.

• Configuration: Instead of a direct spot price, use a specialized oracle that pulls the PT price from the Pendle Market contract. This is then registered in the PriceOracleMiddleware under the Custom Price Feeds section. Navigate to the Price Feed section in the Fusion interface to provide the Pendle Market address to derive the PT price relative to the underlying asset (e.g., PT-sDAI priced against sDAI).

Price feeds can be created with the factory.

3. Substrate Setup for Swapping

For the UniversalTokenSwapper to handle PT tokens, the Atomist must explicitly grant substrates for both the asset and the routing infrastructure.

1. The PT Token: Granted as an allowed asset (Type 1).

2. The Pendle Router: Granted as an allowed target for the swapper executor (Type 2).

4. Execution: Swapping vs. Minting

A common point of confusion is the difference between the Pendle Fuse and the Universal Token Swapper.

The Pendle Fuse

The specialized Pendle Fuse is designed for primary market operations:

• Minting: Converting an underlying asset into PT and YT.

• Redeeming: Converting PT back to the underlying asset at maturity.

• Limit: This fuse does not handle market swaps.

Swapping via Universal Token Swapper

To buy or sell PT tokens on the open market (secondary market) before maturity, you must use the Universal Token Swapper (Market ID: 12).

5. Technical: Substrate Encoding for Swapping

The UniversalTokenSwapper uses a typed substrate system. When configuring substrates for Pendle PTs via grantMarketSubstrates, use the following encoding logic provided by the UniversalTokenSwapperSubstrateLib:

Substrate Type	ID (Type Byte)	Usage for Pendle
Token	0x01	PT Token Address: Allows the swapper to spend/receive the PT.
Target	0x02	Pendle Router Address: Allows the swapper to call the Router.
Slippage	0x03	Max Slippage: Defines the USD-value delta allowed for the PT swap.

Encoding Format

Substrates are bytes32 values where the first byte is the Type ID:

• Token/Target: [1-byte Type][11-byte zero padding][20-byte Address]

• Slippage: [1-byte Type][31-byte Slippage Value in WAD]

6. Substrate Configuration Checklist

To successfully curate a vault using Pendle PTs, ensure the following substrates are granted:

Market	Market ID	Required Substrate
ERC20 Vault Balance	7	The PT Token Address (to track holdings)
Universal Swapper	12	The PT Token Address (Type 1: Allowed token)
Universal Swapper	12	The Pendle Router Address (Type 2: Allowed target)
Price Oracle	N/A	Custom PT-to-Asset feed derived from Pendle Market

Atomist Pro-Tips

Handling Maturity

When a PT token reaches maturity, its price effectively becomes 1:1 with the underlying asset. However, the vault doesn't automatically "exit" the position. The Alpha must execute a redeem action via the Pendle Fuse or swap it out to move the capital back into a liquid state or a new PT vintage.

Decimal Sensitivity

PT tokens often have specific decimal configurations. Always verify the underlyingDecimals in the PriceOracleMiddleware match the PT's contract to avoid massive over- or under-valuation of the vault.

Testing on Forks

Before deploying to mainnet, always simulate the Pendle swap and balance update on a local fork (Anvil). Ensure that after the swap, totalAssets() correctly reflects the PT position and that the updateMarketsBalances function handles the custom oracle without reverting.