With Text-O-Matic 2.0, you can go crazy with text! Envelope text provides a way to warp text within a shape “envelope” that has various control points depending on the shape.
When you first convert a text layer to an envelope text layer, it starts as a wave shape. Note that it is easier to manipulate the envelope control points if you start with a larger font size before converting it to envelope text.
(In the image above you can see that the layer preview is different than the actual envelope text. This is because I edited the text contents before I took this picture.)
To change the shape of the envelope, drag one of the control points.
The green control points change the shape of the envelope, while the gray control points change the size. The corners can be dragged up and down, and the curve control points can be dragged almost anywhere.
To change the shape of the envelope, tap the Envelope icon.
There are fifteen shapes to choose from. The curved shapes have Bezier control points with which you can adjust the shape of the curve or curves. The control points for the angular shapes change the position and acuteness of the angles.
Envelope text is special in that it is the only text type that can have outlines.