Research Summary
The report provides a comprehensive analysis of Pendle, a decentralized yield-trading protocol. It covers Pendle’s use case, adoption, revenue, tokenomics, treasury, governance, team and investors, competitors, risks and audits. The report also highlights Pendle’s expansion into Real World Assets and its strategic positioning in three rapidly growing sectors of DeFi: RWAs, yield trading, and liquid staking.
Key Takeaways
Pendle’s Unique Offering
- Pendle’s Functionality: Pendle is a decentralized yield-trading protocol that allows users to execute various yield-management strategies. It aims to bring the $400 trillion interest derivatives market from traditional finance on-chain and into the world of DeFi, making it accessible to all investors.
- Expansion into Real World Assets: In September, Pendle expanded its product offering to include Real World Assets, with initial listings including FluxDeFi fUSDC and MakerDAO / spark_protocol_ sDAI.
Adoption and Revenue
- Impressive TVL: Pendle’s Total Value Locked (TVL) has reached $164 million and has been consistently trending upwards since the beginning of 2023. Over 90% of TVL is on Ethereum and Arbitrum.
- Revenue Generation: Pendle has two sources of revenue: Swap Fees and YT Fees. In the past 30 days, Pendle has generated $20k in revenue, ranking 3rd among Yield projects and 84th among all projects.
Tokenomics and Treasury
- Token Supply and Inflation: The supply of $PENDLE follows a hybrid inflation model, with weekly emissions decreasing by 1.1% each week until April 2026. All team and investor tokens have now been unlocked, and future token inflation goes purely to liquidity incentives.
- Ecosystem Fund: Pendle’s “Ecosystem Fund” currently holds 22.76m $PENDLE, equivalent to $14.7m USD. The fund is primarily used for on-chain integrations, particularly for liquidity bootstrapping purposes.
Team, Governance, and Competitors
- Team and Governance: Pendle was launched in January 2021 by a predominantly anonymous team and employs a decentralized governance process using vote escrowed mechanics.
- Competitive Landscape: While Convex is the largest player in the yield category, Pendle is swiftly gaining ground and, along with the Magpie ecosystem, is one of the only two protocols in the top 5 that have experienced positive growth in TVL over the past month.
Actionable Insights
- Investigate the Potential of Pendle: Given Pendle’s unique offering, impressive TVL, and revenue generation, it may be worth exploring the potential of this protocol further.
- Consider the Risks: As with any investment, it’s important to consider the risks, which in Pendle’s case include smart contract vulnerabilities, underlying token risks, and third-party protocol interactions.
- Monitor the Competitive Landscape: Keep an eye on the competitive landscape, particularly Convex and the Magpie ecosystem, to understand how Pendle is performing relative to its peers.
