- On June 27, a number of liquid trading platforms, such as eETH from Ether.Fi and ezETH from Renzo, matured, forcing investors to take their money out.
According to DeFiLlama data, the Total Value Locked (TVL) of yield trading protocol Pendle fell by 45% in just one week, from $6.2 billion to $3.5 billion.
On June 27, a number of liquid restaking markets developed, including Ether.Fi’s eETH, Renzo’s ezETH, Puffer’s pufETH, Kelp’s rsETH, and Swell’s rswETH. This is when the dramatic decrease occurred. As these markets developed, consumers were able to withdraw significant amounts of wealth by redeeming their principal deposits.
Large liquid restaking token (LRT) pools that were initiated this year matured on June 27 and totaled about $4 billion, according to TN Lee, CEO of Pendle, who spoke with The Defiant.
LRTs divide into Principal Tokens (PTs) and Yield Tokens (YTs) on Pendle. Users that stake ETH-based assets receive PT-ETH, which they can exchange back for ETH at the end of the staking term. YTs, which are exchanged independently of the principal amount, are the interest generated from the staked asset.
According to Lee, Pendle’s mechanics operated just as planned. In exchange for leverage points, users claimed their PTs and liquidity provider tokens while their YTs depreciated to zero.
A significant contributing element to the decline in TVLs was the decline in YT demand. The market for YTs decreased as a number of customers left Pendle as the LRTs matured, which led to PT yields falling below 10%.
The PENDLE token price crashed by 40%, falling from $7 to $4.2 in just one week, as a result of consumers moving their ETH to other platforms as a result of this loss, as reported by CoinGecko.
Lee concurs that there was little demand for YTs because a number of riders left Pendle as the LRTs became more developed. Although these tokens allow users to receive yield on their assets, they lose all of their value when they mature.
Pendle’s TVL increased by 40% in April, to around $3.9 billion. The primary reason for this growth was the growing need to leverage exposure to DeFi protocols.
By providing traders with a means of obtaining leveraged exposure to EigenLayer and LRT protocols including as EtherFi, Swell Network, and Puffer Finance, Pendle was able to leverage this demand.
Through the protocol, EigenLayer points can be obtained by restaking ETH or LSTs like Lido’s stETH.
Trading YTs gives traders the opportunity to farm more airdrop locations. The reasoning behind this is that the airdrops that are obtained will be worth more than the money spent on the YTs.
Data from Token Terminal indicates that Pendle’s daily active users have decreased from 23,000 in April to fewer than 1,000 as of this now. There were between 3,000 and 5,000 daily active users in May and June.
A rollover option was added by Pendle to help customers move their liquidity to other pools.
Even yet, this is a normal phase of our platform’s lifecycle despite the TVL reduction. According to him, the rollover procedure makes sure users can transfer their assets with ease.
Lee says that the APY isn’t as high as it used to be (over 40%), and that the lesser liquidity in new pools could have an influence on prices. Pendle is still a viable option for ETH yields, though.
Pendle is working with different protocols to recover the TVL, according to Lee.
He said, “We’ve been talking with protocols, and some of them provided higher multipliers.” There are currently good prospects in the Pendle pool on Arbitrum, for instance, because EtherFi offered us a 4x multiplier and some of our pools on the network are rewarded with $ARB tokens for LPs.
Pendle has also released features like limit orders and zero price effect mode. A PT and LP rollover option has been added, and pools that currently offer good APY have been highlighted.
Lee came to the conclusion that PendleV3 is being developed by the Pendle team in order to address rising markets and offer new yield techniques.
Pendle works with any asset that generates yield. According to him, Pendle has expanded throughout the first part of the year because to the points meta, which permits leverage points farming or extremely high fixed yields. Even while this is currently the key factor driving our growth, we’re nevertheless willing to investigate and test all kinds of assets, both within and outside of the restaurant industry. We are especially outspoken in our support of assets that generate yield but are not Ethereum, like Bitcoin.
Disclaimer : This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.
