Pendle, a yield trading protocol, is taking active steps to address a significant 40% decline in its total value locked (TVL). The platform has introduced new liquidity pools on the Arbitrum network, targeting holders of various tokens including UNI, LINK, ETH, WBTC, CRV, CVX, USDT, and USDC. These pools are designed to attract more liquidity providers (LPs) by offering them opportunities to earn rewards.
Partnership with Karak Network
In a strategic move, Pendle has teamed up with the restaking protocol Karak Network. This partnership enables depositors to place Pendle’s Principal Tokens (PT) on Karak’s platform and accrue Karak points (XP). According to a recent tweet by Pendle, participants can also earn additional rewards along with Karak XP by using PT-weETH, PT-rsETH, and PT-ezETH. This collaboration aims to incentivize more users to join Pendle’s pools, thereby boosting liquidity.
Efforts to Recover from TVL Drop
Pendle’s CEO, TN Lee, highlighted the company’s extensive efforts to recover from the TVL decline by collaborating with various protocols. Some of these protocols offer higher multipliers to aid Pendle’s recovery. For instance, EtherFi has provided a 4x multiplier, and Pendle’s pools on Arbitrum offer additional incentives with ARB tokens to attract LPs. The sharp drop in TVL, which fell from $6.2 billion to $3.7 billion, was largely attributed to the maturation of several large liquid restaking markets on June 27. This led to a significant outflow of funds, alongside a 50% drop in Pendle’s native token, PENDLE, before partially recovering.
How Pendle Works
Pendle operates by dividing Liquid Restaking Tokens (LRTs) into Principal Tokens (PTs) and Yield Tokens (YTs). Users who stake assets such as ETH receive PT-ETH, which can be converted back to ETH at the end of the staking period. Meanwhile, YTs, representing the rewards earned from staked assets, can be traded separately, giving users flexibility in managing their stakes and rewards. The maturation of LRT pools earlier this year coincided with heightened activity on Pendle, as users aimed to maximize their allocations for EigenLayer’s token generation event (TGE). This resulted in an outflow of around $4 billion from the protocol, underscoring the cyclical nature of staking and liquidity in the DeFi space.
Key Takeaways for Users
- New Arbitrum pools aim to attract LPs by offering rewards.
- Partnership with Karak Network provides extra incentives via Karak XP.
- Protocols like EtherFi offer higher multipliers to support recovery.
- Significant TVL drop due to the maturation of large liquid restaking markets.
- Pendle’s split token system allows flexible management of stakes and rewards.
Conclusion
Pendle’s proactive measures aim to counteract the significant decline in TVL and restore liquidity. By launching new pools and collaborating with prominent protocols, the platform is determined to attract more liquidity providers and ensure a robust recovery. These strategic initiatives highlight Pendle’s commitment to maintaining a competitive edge in the dynamic DeFi landscape.