Pendle lock-up value shrinks by 40%: LRT derivatives expire + re-pledge craze fades

On-chain interest derivatives market Pendle has seen its total value locked (TVL) drop significantly over the past week. TVL dropped 40% to $3.7 billion from $6.18 billion on June 27. The main reason is the expiry of certain liquid pledged derivatives earlier this year.

( Pendle Finance’s on-chain interest derivatives market perfectly amplifies LRT’s capital efficiency )

The sharp decline in TVL is related to the expiry of LRT derivatives

The significant reduction in Pendle's TVL is closely related to the expiration of the liquid re-pledge market, including Ether.Fi's eETH, Renzo's ezETH, Puffer's pufETH, Kelp's rsETH and Swell's rswETH. These liquid replenishment derivatives expired on June 27, which had a significant impact on the protocol's locked value.

Pendle Finance Revenue Tokenization Platform

Investors can use Pendle Finance to bring the concept of principal and interest-separated bonds from traditional finance into Web3. They can purchase zero-coupon assets or income-earning assets, but in Pendle Finance they are called:

• Principal Token (PT): represents the underlying asset. After expiration, PT can redeem the underlying asset at a one-to-one ratio. For example, 1 PT-stETH can redeem stETH worth 1 ETH.
• Yield token (YT): You can obtain the income generated by the underlying assets. For example, holding 10 YT-stETH can allow investors to obtain all the income from the 10 ETH deposited in Lido.

In addition to using ETH and USDC to purchase the above tokens, investors can also choose to directly use interest-earning underlying assets to purchase (such as stETH), and then automatically complete the conversion through the AMM mechanism in the protocol. This time the funds in Pendle expired after the predetermined period, affecting the dynamics of the platform.

Liquid Re-Staking Tokens (LST) Bring Huge Yields to Pendle

In the first half of this year, Pendle saw a large inflow of assets from the Liquid Restaking Protocol, mainly due to expectations for project airdrops such as EigenLayer. This increase significantly increased Pendle TVL during this period.

Pendle’s Rollover feature and its impact

In order to help users manage assets, Pendle has introduced the Rollover function to help users smoothly transfer liquidity to new pools. Pendle’s mechanism allows users to receive basic assets and income tokens. However, the expiration of certain liquid markets and reduced interest in EigenLayer-related LRT resulted in a significant decrease in TVL.

Pendle is still trying to reach new heights and attack Symbiotic

Facing the changing market, Pendle recently launched several new LRT markets through Mellow, focusing on another re-hypothecation protocol, Symbiotic, showing that Pendle is still working hard for new opportunities.

( Lido can also earn points! Cooperate with Mellow Finance and Symbiotic to capture the stETH re-staking market )