Bankless: Pendle sees record outflows, why is it less attractive than before

Author: Jack Inabinet, Bankless; Translator: Deng Tong, Golden Finance

The end of an era? PENDLE holders woke up to find that the value of their holdings had dropped by nearly 8% that day. What caused the price slide, and can the revenue-splitting protocol continue to offer greater upside?

Supported by a two-and-a-half-week rally that began in the middle of last month, PENDLE's relative valuation surpassed BTC by nearly 300% during 2024 and brought the token to an all-time high against BTC on April 6 before encountering resistance at the 0.0001 level.

While the total value locked (TVL) within Pendle’s smart contracts reached $5.4 billion on Wednesday, it experienced its largest outflow on record yesterday, with deposits losing 18% after five separate pools expired.

Demand for Pendle has been driven by leveraged speculation on the points program and its expected future airdrops, but the arrival of recent allocations from ether.fi, Ethena, and Renzo has significantly compressed the implied yields that speculators can earn on the underlying assets.

The decline in yields has led to a sharp drop in trading activity, with just $23 million in trading activity on Wednesday, the lowest since January and a sharp drop from the daily trading volume of around $250 million in March that drove PENDLE's recent outperformance.

The compression in trading activity has led to a sharp drop in yields for liquidity providers, and their failure to roll over deposits at maturity indicates a decline in the attractiveness of Pendle's yield opportunities, causing users to move their funds elsewhere.

PENDLE has been one of the best performing established DeFi assets in 2024, but given the impending airdrop allocation that users have been speculating about, it may be time to acknowledge that the protocol’s best days are behind it — at least for the foreseeable future. The protocol is in full swing and has minimal adoption of lower-yielding pools such as stETH and aUSDT.