How to Earn Passive Income Without Trading: A Step-by-Step Guide to Pendle

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In the volatile world of cryptocurrency, many investors focus solely on price movements — buying high, selling low, and missing out on long-term wealth-building opportunities. But there’s a smarter, more sustainable way to grow your crypto holdings: earning passive income without active trading.

This guide will walk you through a proven DeFi strategy using Pendle, a decentralized finance protocol that allows you to lock in fixed yields on stablecoins like USDC and USDe. Whether you're holding through a bear market or simply want consistent returns, this method offers stability, predictability, and compounding growth — all without needing to time the market.

Why Most Holders Miss Out on Passive Income

A common mistake among crypto investors is leaving assets idle on centralized exchanges. While your coins may be “safe,” they’re not working for you. That means zero yield — a missed opportunity when tools exist to generate steady returns.

Even those who cash out during rallies often let their stablecoins sit untouched, waiting for the next dip. But what if you could earn interest while you wait?

👉 Discover how to start earning yield on your idle crypto holdings today.

The Problem with Variable Rates

One popular way to earn yield is lending stablecoins on platforms like Aave or Compound. For example, Aave offered an average APR of 6.28% on USDC over the past year — meaning $10,000 would earn $628 annually.

That’s better than 0%, but there's a catch: variable rates fluctuate based on market demand. What earns 6% today could drop to 2% tomorrow. This uncertainty makes long-term financial planning difficult.

Enter Fixed-Yield Strategies

To eliminate rate volatility, advanced DeFi users turn to fixed-income protocols — and Pendle Finance leads the pack.

What Is Pendle and How Does It Work?

Pendle transforms variable yields into tradable, time-bound assets by splitting yield-generating tokens into two components:

By purchasing PTs, you effectively lock in a fixed annual percentage yield (APY) for a set period — similar to buying a zero-coupon bond.

Real-World Example: Locking in 20.5% APY

In December 2024, Ethena’s sUSDe offered a floating APR as high as 27%. However, by early 2025, that rate had dropped to around 9%. To secure higher returns, I used Pendle to lock in a 20.5% fixed APY for six months.

Here’s how it played out:

Even though the full annualized rate is 20.5%, my actual holding period was half a year — hence the prorated return. Had I held for a full year, I’d have captured the complete yield.

This strategy removes speculation — you know exactly what you’ll earn and when.

Step-by-Step: How to Lock Fixed Yields on Pendle

Before getting started, ensure you:
✅ Own a self-custody wallet (e.g., MetaMask or Ledger)
✅ Know how to transfer tokens from exchanges to your wallet

💡 Pro Tip: Always use a hardware wallet for large positions to enhance security.

Step 1: Connect Your Wallet

  1. Go to Pendle Finance.
  2. Click “Connect Wallet” and select MetaMask (or your preferred provider).
  3. Approve the connection request in your wallet.

Once connected, Pendle can interact with your public address and facilitate trades.

Step 2: Choose Your Fixed-Yield Market

As of early 2025, Ethena’s sUSDe offers:

To lock this rate:

  1. Find the PT 16.75% option.
  2. Select “Buy PT”.
  3. Enter your investment amount (e.g., 10,000 USDe).

The interface will show:

Even if market rates drop, your locked yield remains unchanged.

👉 Learn how top traders maximize yield with smart DeFi strategies.

Step 3: Approve Token Usage

Since USDe is an ERC-20 token, you must first authorize Pendle’s smart contract to access your funds.

  1. Click “Approve USDe”.
  2. Confirm the transaction in MetaMask.
  3. Wait for blockchain confirmation.
🔐 Why Approval Is Needed: ERC-20 standards separate ownership from spending rights. Approval ensures only authorized contracts can move your tokens — a critical security feature.

For best results, hold USDe in your wallet before starting. If you don’t own it yet, use CowSwap (a DEX aggregator) for optimal exchange rates with lower slippage.

Step 4: Swap Into Principal Tokens

  1. After approval, click “Swap”.
  2. Sign the transaction in MetaMask.
  3. Wait for confirmation.

🎉 Success! You now hold PT-USDe-27Mar2025, which will mature into 10,115.4 USDe by March 27, 2025.

You’ve officially locked a fixed return — no further action required.

Step 5: Monitor Your Position

  1. Navigate to “My Dashboard”.
  2. View your open position and real-time P&L.
  3. Watch your gains accrue daily.

At maturity:

Using CowSwap again ensures minimal fees and best pricing during conversion.

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These terms reflect what users actively search for when exploring low-risk crypto income strategies.

Frequently Asked Questions (FAQ)

Q: Is Pendle safe to use?

A: Pendle has undergone multiple audits and uses well-tested smart contracts. However, like all DeFi protocols, it carries risks such as smart contract vulnerabilities and impermanent loss (though minimal with PTs). Always do your own research and start small.

Q: Can I withdraw my funds before maturity?

A: Yes. While PTs are designed for holding until expiry, you can sell them on secondary markets like Pendle’s built-in exchange or CowSwap. Early exit prices depend on current market conditions.

Q: How does Pendle generate fixed yields?

A: Pendle pools variable yield streams (like staking rewards) and sells them forward at a discount. Buyers of PTs get guaranteed returns; YT holders speculate on higher yields — creating a balanced marketplace.

Q: What happens when my PT matures?

A: On the maturity date, you can redeem your PT token 1:1 for the underlying asset (e.g., USDe), plus all accrued interest. The redemption process is automated and straightforward within the app.

Q: Are there gas fees involved?

A: Yes — every transaction (approval, swap, redemption) requires paying network fees on Ethereum or supported Layer 2s like Arbitrum or Base. Using Layer 2 networks reduces costs significantly.

Q: Can I use this strategy with other tokens?

A: Absolutely. Pendle supports various yield-bearing assets including staked ETH (weETH), Ethena’s sUSDe, and more. The process remains consistent across different markets.

Simplifying DeFi: The Future of Yield Management

Despite its power, many users find DeFi intimidating due to fragmented workflows across multiple platforms — swapping on CowSwap, staking on Ethena, then locking yields on Pendle.

To solve this, I’m building DeFi Koala, a tool that streamlines the entire process into a single click: “Lock Fixed Yield.” No more juggling tabs or managing approvals manually.

👉 See how automated yield optimization can simplify your crypto investing journey.

By leveraging Pendle, you transform idle stablecoins into predictable income generators — eliminating emotional trading decisions and capitalizing on compounding gains over time.

Whether you're new to DeFi or refining your portfolio strategy, locking fixed yields is one of the most effective ways to build wealth without constant market monitoring.

Start small, learn the flow, and scale up as confidence grows. In the world of passive crypto income, consistency beats timing — every single time.