Trouble for Pendle? | Bankless

End of an Era? Holders of PENDLE woke up to find their bags down nearly 8% on the day. What caused the price to slide, and can the yield-splitting protocol continue to provide enhanced upside going forward?

The relative valuation of PENDLE had outperformed BTC by nearly 300% during 2024, bolstered by a two-and-a-half week pump that began in the middle of last month and allowed the token to achieve new all-time highs against BTC on April 6 before finding resistance at the 0.0001 level.

While the total value locked (TVL) inside of Pendle’s smart contracts reached $5.4B on Wednesday, the application experienced its largest outflow on record yesterday, losing 18% of its deposit base after the maturity of five separate pools occurred. 

Demand for Pendle has been fueled by leveraged speculation on points programs and their anticipated future airdrops, but the recent arrival of distributions from ether.fi, Ethena, and Renzo has greatly compressed implied yields speculators can earn on the underlying.

This decrease in yields has led to a substantial drop in transaction activity, which amounted to a meager $23M on Wednesday, the lowest recorded volume since January and a steep decline from the roughly $250 million in daily volume that catalyzed PENDLE’s most recent period of outperformance in March.

Compression in transaction activity has materially decreasing yields for liquidity providers, and their failure to roll over their deposits at maturity indicates that the attractiveness of Pendle yield opportunities has declined, leading users to take their capital elsewhere.

PENDLE has been one of the best-performing established DeFi assets during 2024, but it may be time to acknowledge that the Protocol’s best days are behind it – at least for the foreseeable future – considering that the airdrop distributions users have been speculating on are coming into full swing and the Protocol has seen minimal adoption of lower yielding pools, like stETH and aUSDT.