DeFi Protocol Pendle’s TVL Drops 40% In A Week, What’s Behind the Exodus?

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As a researcher with experience in the DeFi space, I’m closely monitoring the recent developments at Pendle, a popular Decentralized Finance (DeFi) protocol that has seen a significant drop in total-value-locked (TVL) over the past week. The protocol, which had amassed over $6 billion in user deposits, has now lost nearly one-third of that value.

As an analyst, I’ve noticed that over the past week, the decentralized finance (DeFi) protocol, Pendle, which spearheaded the EigenLayer surge, experienced a significant setback with a 40% decrease in total-value-locked (TVL). At its peak, Pendle had amassed over $6 billion in user deposits. However, it has since lost approximately one-third of that amount. Starting last Wednesday, there was a mass withdrawal of funds, totaling around $3 billion from Pendle deposits. A considerable portion of these withdrawals consisted of liquid re-staking tokens. As of Monday, the current value of user deposits in the DeFi protocol, Pendle, stood at approximately $3.7 billion.

What’s Behind This Recent Exodus on Pendle?

In an interview with DL News, Ian Unsworth, founder of Kairos Research, explained that the recent redemptions were partly caused by certain investments reaching their maturity. He further mentioned that coincidentally, this occurred simultaneously for the top five Long-Term Funds.

Yet, a portion of these outflows might be linked to the airdrops craze, known for triggering volatility among various protocols. Last week, Pendle encountered a significant event when its markets for tokens like Ether.Fi’s eETH, Puffer’s pufETH, Renzo’s ezETH, Kelp’s rsETH, and Swell’s rswETH reached maturity on June 27.

Investors could have opted to transfer their tokens into the latest Pendle markets, but the rewards weren’t as enticing as before. The reason being, some investors had put their resources into DeFi protocol EigenLayer and related projects such as Pendle, with the expectation of receiving anticipated airdrops – free tokens given to early supporters. However, most of these airdrops have already been distributed.

As a researcher studying the developments in the decentralized finance (DeFi) space, I’ve come across an interesting observation regarding the distribution of tokens for two separate platforms: EigenLayer and liquid staking protocols like Ether.Fi and Renzo. In May, early adopters of EigenLayer successfully claimed their share of the native $1.6 billion worth of EIGEN tokens. On the contrary, Ether.Fi and Renzo distributed their tokens earlier – in March and April, respectively – through airdrops to access their offerings connected to EigenLayer.

The three projects will distribute their tokens during distinct phases, allowing users to secure a portion of potential future airdrops.

Users Are Derisking

Unsworth mentioned that the upcoming airdrop would be slightly reduced in size, causing some individuals to contemplate reducing their risk. Furthermore, he noted that the Renzo points program was set to conclude in late July, which might lead many people to ponder whether they wish to secure their tokens once more.

The flows from Pendle have had a ripple effect on protocols like Zircuit, leading to a decrease of 15% in Zircuit’s value within the last week. Conversely, Pendle’s native token, PENDLE, has experienced a similar downturn, dropping by 17% over the same period and is now priced below $5.0.

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2024-07-02 07:44