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The cryptocurrency world has become a multifaceted market. Every metric now holds separate importance. The field has grown so much that tracking data for altcoins has become challenging. On the other hand, determining which data clearly affects prices is becoming increasingly difficult. Today, a metric for the altcoin Pendle was announced. There was a drop in TVL.
Reasons Behind the Decline
The latest developments in the altcoin Pendle have caused a stir in the cryptocurrency community. According to this, there was a significant drop in Pendle’s Total Value Locked (TVL). According to DeFiLlama’s data, Pendle’s TVL dropped by 45%, falling from $6.2 billion to $3.32 billion within a week. This sharp decline coincided with the maturation of several liquid restaking markets, such as Ether.Fi’s eETH and Renzo’s ezETH, which matured on June 27. As these markets matured, users withdrew their main investments, leading to significant capital outflows.
Pendle’s CEO TN Lee provided insights into the main dynamics behind this decline. Lee explained that the large liquid restaking token (LRT) pools, worth approximately $4 billion, launched earlier in the year, matured on June 27.
On Pendle’s platform, LRTs are divided 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, representing the interest earned from the staked asset, can be traded independently of the principal. As these tokens drop to zero at maturity, users claiming their PTs and liquidity provider tokens led to significant fund outflows from Pendle.
Yield Decline as a Major Factor in Outflows
The decreased demand for YTs played a significant role in the TVL drop. Following the maturation of LRTs, many users exited Pendle, reducing the demand for YTs and causing PT yields to fall below 10%.
This yield decline prompted users to shift their ETH to other platforms, exacerbating the TVL drop. As a result, according to CoinGecko data, the price of the PENDLE token also suffered, dropping by 60% from $7 to $3.2 within a week.
Looking ahead, Pendle is collaborating with other protocols to recover TVL. Lee mentioned that they are in talks with protocols offering higher multipliers. For example, EtherFi provided a 4x multiplier, and some pools on the Arbitrum network are incentivized with ARB tokens for liquidity providers. This situation offers good opportunities in the Pendle pool on Arbitrum. However, it is worth noting that all these moves have not yet impacted the Pendle price.
