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A yield trading protocol, Pendle, is actively working to compensate for a significant 40% drop in its total value locked (TVL). To attract more liquidity providers (LPs), Pendle has launched new pools on the Arbitrum network. These pools will cater to holders of various tokens such as UNI, LINK, ETH, WBTC, CRV, CVX, USDT, and USDC, offering them a new platform to join and earn rewards.
Partnership with Karak Network
In addition to this strategic move, Pendle has partnered with the restaking protocol Karak Network. This collaboration allows depositors to place Pendle’s Principal Tokens (PT) on Karak’s platform and earn Karak points (XP).
According to a recent tweet by Pendle, users can earn additional rewards along with Karak XP using PT-weETH, PT-rsETH, and PT-ezETH. This partnership aims to provide extra incentives for users, encouraging more participation and liquidity in Pendle’s pools.
Efforts to Recover from TVL Drop
Pendle’s CEO TN Lee emphasized the company’s efforts to recover from the TVL drop by collaborating with various protocols. Lee mentioned that some protocols offer higher multipliers to support Pendle’s recovery. For instance, EtherFi provided a 4x multiplier, and Pendle’s pools on Arbitrum offer additional incentives with ARB tokens to attract LPs.
The sharp drop in TVL fell from a peak of $6.2 billion to $3.7 billion. This decline was largely due to the maturation of several large liquid restaking markets on June 27. As a result, this development led to a significant outflow of funds, and simultaneously, Pendle’s native token PENDLE experienced a 50% drop before partially recovering during the ongoing crypto rally.
How Pendle Works
Pendle operates by splitting Liquid Restaking Tokens (LRTs) into Principal Tokens (PTs) and Yield Tokens (YTs). When users stake assets like ETH, they receive PT-ETH, which can be converted back to ETH at the end of the staking period. YTs represent the rewards earned from the staked assets and can be bought and sold separately, providing users with flexibility in managing their stakes and rewards.
The maturation of LRT pools launched earlier this year coincided with increased activity on Pendle as users aimed to maximize their allocations for EigenLayer’s anticipated token generation event (TGE). This surge in activity and subsequent pool maturation led to an outflow of approximately $4 billion from the protocol, highlighting the cyclical nature of staking and liquidity in the DeFi space.
