Pendle TVL Approaches $4 Billion On Airdrop Farming Demand

The yield trading protocol processed $530 million of trades on April 2 after launching new Ethena pools.

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image of a pendulum swinging in a parabolic motion

Airdrop fever is accelerating after successful token launches from DeFi projects like EtherFi, Ethena and Wormhole – all of which debuted at multi-billion dollar valuations and richly rewarded early users.

Pendle, a yield trading protocol that lets users farm various projects’ airdrop points with leverage, has seen its total value locked (TVL) go parabolic in the past two weeks, increasing by 40% to nearly $3.9 billion.

Pendle TVL chart
Pendle TVL

The protocol’s PENDLE token is a major beneficiary of the ongoing Ethereum restaking boom, surging nearly five-fold since the beginning of the year. The project boasts a market capitalization of $460 million and processed a record $530 million of trades on April 2.

Pendle Daily Volume chart
Pendle Daily Volume

The spike in activity was driven by the launch of two new USDe pools, which accounted for around $374 million, or 70% of that figure. USDe is the controversial ‘synthetic dollar’ developed by Ethena Labs that kicked off the second phase of its incentives campaign yesterday.

Traders are undoubtedly piling in after the success of the first phase, which saw early participants receive lucrative airdrops — $10,000 invested in USDe Yield Tokens (YT) on Pendle yielded over $80,000 worth of ENA tokens, according to DeFi investor Thor Hartvigsen.

EigenLayer Excitement

Investors are now looking ahead to EigenLayer, the highly anticipated Ethereum staking protocol that has attracted nearly $12 billion in TVL, making it the third-largest DeFi protocol after Lido and Aave.

Eigenlayer points can be earned by restaking ETH or liquid staking tokens (LSTs) like Lido’s stETH through the protocol. This mechanism spawned a wave of liquid restaking tokens (LRTs), which attracted users with additional incentives in the form of their own points programs. All these points are expected to convert into tradable tokens.

Pendle has capitalized on the demand for these points by offering traders a way to obtain leveraged exposure to EigenLayer and LRT protocols like EtherFi, Swell Network and Puffer Finance. It does this by splitting yield-bearing LRTs into their principal (PT) and yield (YT) components.

Buyers of yield tokens (YTs) get to farm additional airdrop points with the expectation that their airdrops will outweigh the cost of the purchase, as YTs lose value over time and become worthless upon maturity.

Pendle Pools for ezETH and rsETH
Pendle Pools for ezETH and rsETH

On the other side of the trade, principal tokens (PTs) function similarly to zero-coupon bonds in traditional finance, allowing buyers to purchase discounted tokens that will be worth 1 ETH at maturity. The current voracious demand for YTs has pushed these fixed yields well into double digits, making them an attractive option for users looking to put their ETH to work without the uncertainty of future airdrop values.