Pendles TVL Decreases by 45 as Major Markets Mature

Currency World Network Report:
According to data from DeFiLlama, the total value locked (TVL) of the yield trading protocol Pendle plummeted by 45% in just one week, dropping from $6.2 billion to $3.5 billion.
This steep decline occurred within several liquidity vibrant markets, including Ethereum. The eETH from Fi, ezETH from Renzo, pufETH from Puffer, rsETH from Kelp, and rswETH from Swell expired on June 27. As these markets matured, they allowed users to redeem their primary investments, resulting in a significant capital withdrawal.
TN Lee, the CEO of Pendle, informed The Defiant that a large liquidity dining token (LRT) pool that launched this year expired on June 27, totaling nearly $4 billion.
On Pendle, LRT is divided into Principal Tokens (PT) and Yield Tokens (YT). Users receive PT-ETH while holding assets like ETH, which can be converted back to ETH upon the end of the holding period. YT represents interest earned from staked assets, which can be traded separately from the principal.
Lee said, “Pendle’s machinery has worked entirely as expected. Users claimed their PT and liquidity provider tokens while YT decayed to zero in exchange for leverage points.”
Another key factor in the decrease in TVL is the diminished demand for YT. As some users exited Pendle after the LRT expired, the demand for YT decreased, leading to PT yields dropping to below 10%.
Data from CoinGecko shows that this decline caused users to move ETH to other platforms, resulting in a 40% plunge in PENDLE token price from $7 to $4.2 within a week.
Lee concurred that some users exited Pendle after the LRT matured, causing lower demand for YT. These tokens enable users to earn yields from their assets but become worthless upon expiration.
TVL Surges
In April, Pendle’s TVL surged by 40%, reaching nearly $3.9 billion. This growth was primarily driven by an increase in demand for DeFi protocols.
Capitalizing on this demand, Pendle provided a way for traders to gain leverage exposure to EigenLayer and LRT protocols (such as EtherFi, Swell Network, and Puffer Finance).
Characteristic layer points can be obtained by re-staking ETH or LST (like stETH from Lido) through the protocol.
When traders purchase YT, they gain the ability to receive additional airdropped points. The underlying idea is that the airdrops received will be more valuable than the cost of purchasing YT.
According to Token Terminal data, Pendle’s daily active users dropped from a peak of 23,000 in April to under 1,000 today. During May and June, daily active users ranged between 3,000 and 5,000.
Pendle introduced rollover delivery features to help users transition their liquidity to new pools.
He said, “Despite the decline in TVL, this is a natural part of our platform’s lifecycle. The rollover process ensures users can seamlessly move assets.”
Lee noted that the APY is not as high as before (over 40%), and the pricing of new pools may be impacted due to reduced liquidity. Nevertheless, Pendle remains one of the higher-yielding places for ETH.
Recovery Plan
Lee mentioned that Pendle is collaborating with other protocols to restore TVL.
“We have been in talks with protocols, some of which offer higher multipliers.” he stated. “For example, EtherFi has provided us with a 4x multiplier, and some pools on the Arbitrum network incentivize LP through the $ARB token, so there are good opportunities in Pendle pools on Arbitrum currently.”
Pendle also introduced features such as zero price impact mode and limit orders. “We have enhanced PT and LP rolling features and highlighted pools that currently offer good APY.”
In conclusion, Lee stated that the Pendle team is developing PendleV3 to introduce new yield strategies and cater to emerging markets.
He added, “Pendle supports any income-generating assets. In the first half of this year, Pendle has evolved from allowing leveraged point farming to very good fixed-income point farming. While this remains our top growth driver, we are still open to exploring and experimenting with other types of assets, both internally and externally. We particularly support income-generating assets beyond ETH, such as BTC.”