TL;DR
TVL Plummets: Pendle Protocol, a DeFi platform, witnessed a 40% drop in total-value-locked (TVL) over the past week. From a peak of $6 billion in user deposits, it now stands at $3.7 billion due to massive outflows.
Maturity and Airdrops: The decline is partly due to products reaching maturity, affecting Pendle’s markets. Additionally, airdrops played a role, with recent events impacting tokens like eETH, pufETH, ezETH, rsETH, and rswETH.
EigenLayer Connection: Users invested in EigenLayer and Pendle for anticipated airdrops. While early adopters secured EIGEN tokens, upcoming airdrops may be smaller. Pendle’s native token, PENDLE, also faces challenges as users reassess their positions.
Pendle Protocol, a prominent DeFi platform that played a key role in the EigenLayer ecosystem, has experienced a significant crisis. Over the past week, its total-value-locked (TVL) has plummeted by 40%.
Pendle reached its highest point with over $6 billion in user deposits, but recent developments caused a significant outflow. In just a week, users withdrew an astonishing $3 billion from Pendle deposits, with a large chunk coming from liquid re-staking tokens. Currently, Pendle’s TVL is at $3.7 billion as of Monday.
Maturity and Airdrops
Ian Unsworth, Kairos Research founder, attributes part of the outflows to products reaching maturity. He explains, “It just so happened that this perfectly lined up for the top five LRTs all at the same time.” These “LRTs” were associated with Pendle’s markets.
Additionally, airdrops, a phenomenon common in DeFi, played a role. Pendle faced a significant maturity event on June 27, affecting tokens like Ether.Fi’s eETH, Puffer’s pufETH, Renzo’s ezETH, Kelp’s rsETH, and Swell’s rswETH. Although investors could choose to convert these tokens into new Pendle markets, the returns were not as appealing as previously.
Pendle Protocol’s Connection with EigenLayer
Many users had invested in EigenLayer and its associated projects, including Pendle, in anticipation of airdrops. In May, early adopters of EigenLayer were able to secure a portion of the $1.6 billion worth of EIGEN tokens.
Ether.Fi and Renzo, two liquid restaking protocols connected to EigenLayer, distributed their tokens through airdrops in March and April. Unsworth hints that the upcoming airdrop might be a bit smaller, causing some participants to consider reducing their risk.
Additionally, the Renzo points program is set to end in late July, leading users to reconsider locking up their tokens. The outflows from Pendle have also affected other DeFi protocols. Zircuit, for instance, has seen a 15% decline in value over the past week.
Meanwhile, Pendle’s native token, PENDLE, has dropped by 17% and is currently trading below $5.0. Pendle faces challenges as users reassess their positions, airdrops unfold, and the DeFi landscape evolves. The protocol’s response to these dynamics will determine its future trajectory.