DeFi Protocol Pendle Loses Over $3B in TVL, Here’s Why

Pendle, a decentralized finance (DeFi) platform that offers returns in the form of tradable digital tokens saw its total value locked (TVL) dropped sharply from $6.2 billion to over $3 billion. This decrease represents a notable 40% drop over the past week. 

Founded in 2021 by TN Lee and a group of pseudonymous developers, Pendle is a cryptocurrency protocol that allows users to trade yield-bearing crypto assets, such as staked ether and LRTs.

With the Pendle protocol, the yield-bearing asset is separated into two components: the underlying token value and the yield element. This enables users to buy and sell either the underlying token or the yield without having to trade both at once. Market pools mature after a certain period.

Why is Pendle TVL down?

According to data from DeFiLlama, the DeFi protocol has seen about $3.7 billion in withdrawals, marking a 40% decrease in Pendle’s total locked-in value (TVL) over the past week. 

The large decline in TVL can be linked to the maturation of multiple liquid staking markets within the DeFi project’s ecosystem. Products related to ether.fi’s eETH, Renzo’s ezETH, Puffer’s pufETH, Kelp’s rsETH, and Swell’s rswETH on the Pendle market expired on June 27, leading to a significant outflow of funds.

Pendle’s TVL increased significantly in the first half of this year as a result of increased inflows from liquid restaking protocols, particularly as market airdrops such as EigenLayer were anticipated. 

The platform had introduced a rollover feature in its application and provided a comprehensive guide to assist existing users in transitioning their liquidity to new pools. This mechanism enabled users to claim the underlying assets and yield tokens, resulting in a significant decrease in TVL amid a perceived decline in interest in EigenLayer-focused LRTs.

Furthermore, the outflow of funds from Pendle impacted the related protocol Zircuit, resulting in a 15% decrease in deposit value within a week.

Despite the drop, the protocol has outlined several other new assets that users can participate in, including a short dated eETH for July 25 and a long dated eETH (for December 26). There is also a new series of September 26 pools, Ethena USDe, Symbiotic and Mellow LRTs and Karak LRTs among others.

Amid the drop in TVL, PENDLE, the native token of the Pendle Finance ecosystem, registered a 1.06% decrease in the last 24 hours, exchanging hands at $4.87.