Pendle Attracts Over $125M In TVL With ‘Discounted Assets’

Equilibria and Penpie Kick Off ‘Pendle Wars’ For Governance Control Of Yield Trading Protocol

By: Owen Fernau Loading...

Pendle Attracts Over $125M In TVL With ‘Discounted Assets’

Total value locked (TVL) in Pendle, a DeFi protocol that splits yield-bearing tokens into their principal and yield components, hit an all-time high of $127M on July 4.

Inflows accelerated after Ethereum’s Shanghai upgrade went live in April, enabling withdrawals of staked ETH for the first time. Data from DeFiLlama shows that over $40M worth of stETH has since been tokenized on the platform.

Pendle TVL Breakdown, stETH in yellow

The project’s PENDLE token, which accrues protocol fees when locked, is up over 1,700% this year, trading at levels last seen two years ago during the height of the bull market.


In addition to yield-splitting, Pendle also features an automated market maker (AMM), where traders can buy and sell either the principal token or its associated yield separately. At over 5,000 transactions, the AMM saw a major spike in activity on July 3.

Pendle AMM Activity

Increased Efficiency With V2

Dan, growth lead at Pendle, told The Defiant that the trading volume on the AMM has been growing even faster than the value locked in the protocol. He cited Pendle’s V2 deployment, which went live in November, as a key driver for the momentum.

Pendle V2 increased the capital efficiency of the AMM by combining the principal and yield tokens into one pool, according to a post on the release. It also increased capital efficiency by taking into account the relatively small fluctuations in yield. “We know that yields are predictable, [so] we can concentrate our liquidity into a specific range,” Dan said.

Cornerstone Of Traditional Finance

By enabling yield-splitting, Pendle represents what could be a major new DeFi primitive.

Splitting bonds into their principal and yield-bearing components is common practice in traditional finance, allowing more conservative investors to lock in fixed yields while enabling traders to speculate on variable rates.

Projects like Voltz, an interest rate swap protocol, are also looking to make yield trading a new pillar of the DeFi market.

The broader trend of “LSTfi,” the proliferation of applications built around liquid staking tokens (LSTs) like Lido Finance’s stETH, is also buoying Pendle — the protocol’s deepest pool has nearly $20M of stETH locked up until December 2025.

Traders can lock up yield-bearing tokens for a set period in exchange for principal (PT) and yield (YT) tokens, which can be traded separately.

Principal tokens trade at a discount since the yield component has been removed, and purchasers can lock in a fixed yield until their chosen maturity. Meanwhile, yield tokens offer traders a leveraged bet on future yields.

Yield Splitting

Nick Ford, a DeFi investor and content creator, told The Defiant he started paying attention to Pendle when it launched on Arbitrum, a scaling solution for Ethereum, earlier this year. “I appreciated it because it was actually serving a need by creating a marketplace to trade yields,” he said.

Building For Retail and Institutions

Dan said that the project split its efforts to expand on retail and institutional fronts. To that end, Pendle’s user interface features a toggle to switch between “simple” and “pro” versions.

The retail side has mostly focused on education — trading yield isn’t as intuitive as spot trading, so Pendle developed educational materials to help users.

On the institutional side, Dan said Pendle has reached out to institutions to understand their pain points in order to make the product more useful. “I would say the hype comes from retail, but the utility at the moment comes from mostly bigger players,” he said.


Behind the scenes, projects are sprouting up to build atop the yield-trading protocol — Pendle features a locking mechanism for its PENDLE token, which has created a dynamic reminiscent of the Curve Wars.

Like Curve’s CRV, users can lock up PENDLE in order to earn trading fees and vote on where to direct token incentives emitted by the Pendle protocol.

Two projects, Equilibria and Penpie, are at the center of the “Pendle Wars.” Both offer higher yields on PENDLE than Pendle offers directly.

Because of this, Equilibria controls over 26% of the vePENDLE supply, while Penpie has over 24%, according to a Dune data dashboard.

vePENDLE Holders - Equilibria in green, PenPie in teal

The projects are fighting over PENDLE because the locked tokens’ voting rights are valuable.

Other projects will pay Equilibria and PenPie to use their locked PENDLE to vote to incentivize liquidity for specific pools on the Pendle protocol. Colloquially, these incentives are called “bribes.”

Speaking to the momentum behind the burgeoning Pendle ecosystem, Equilibria and Penpie both launched just last month and have nearly $70M in TVL between them.

Quiet Expansion

Pendle has been relatively quiet in terms of raising money — the project raised $3.7M in April 2021 in a seed round led by Mechanism Capital and hasn’t raised money since.

That doesn’t appear to have dampened the project’s momentum of late – Pendle recently received a major boost from Binance, the world’s largest centralized exchange by volume, which listed PENDLE on July 3.

The protocol seemingly returned the favor on July 5, when it launched on BNB Chain, the Ethereum-compatible blockchain developed by Binance.