Pendle Finance is an innovative interest rate derivatives protocol. In simple terms, it splits yield-bearing tokens—digital assets that generate returns simply by being held—into Principal Tokens (PT) and Yield Tokens (YT). This mechanism enables users to choose different risk and return exposures based on their individual needs, offering greater flexibility in managing investments.
Over the past two years, Pendle has stood out in a highly competitive market, successfully establishing itself as a leading protocol within the LSDFi and yield-generating sectors. However, recently, Pendle’s Total Value Locked (TVL) plummeted from nearly $7 billion to around $3.4 billion, and its token price nearly halved.
This situation has attracted widespread attention. This article provides a detailed analysis of the reasons behind this TVL drop, examines its impact on the PENDLE token, and offers an outlook for future performance.
Understanding the Sharp Drop in TVL
According to the latest data from DefiLlama, Pendle’s TVL reached a peak of $6.7 billion on June 10. Within the following two weeks, however, it sharply declined by 40%, meaning approximately $3 billion in assets were withdrawn from the protocol. This significant decrease was primarily due to the expiration of multiple financial products on Pendle, leading users to unstake and withdraw their funds.
Since June 26, Pendle users have withdrawn over $3 billion, largely composed of liquidity restaking tokens (LRTs). Comparing the TVL declines of these restaking protocols with Pendle’s own TVL trajectory reveals that many reached their peak in June or July before gradually falling.
The large-scale outflow of LRT liquidity on Pendle can be attributed to two main factors:
- The expiration of products within Pendle’s markets and Automated Market Makers (AMMs).
- Reduced anticipation or completion of airdrops from restaking projects (e.g., Ether.fi, Puffer, Renzo).
For instance, Ether.fi is preparing to launch its Season 2 airdrop, which may have prompted some investors to cash out early.
Examining Major Asset Withdrawals
From the TVL peak on June 10 to July 8, Pendle’s TVL decreased by approximately $3 billion. This decline involved the withdrawal of several major market assets, including:
- Ether.fi’s weETH
- Ethena’s sUSDE
- Zircuit’s ezETH
- Renzo’s assets
These withdrawals were not triggered by a single cause but resulted from a combination of factors.
Why Did weETH Withdrawals Occur?
Ether.fi’s announcement of its Season 2 airdrop likely encouraged investors to realize their profits and withdraw funds prematurely. Additionally, lowered expectations concerning airdrop rewards may have led some investors to adopt a wait-and-see approach, temporarily exiting the market.
Causes Behind sUSDE and ezETH Outflows
The expiration of deposit periods on platforms like Ethena and Zircuit led investors to unstake and reclaim their capital. Furthermore, these platforms may have faced liquidity pressures, prompting users to withdraw funds to avoid potential risks.
Why Did Early Withdrawals Happen?
Aside from withdrawals linked to expired assets, many assets scheduled to mature in July, August, and September were also withdrawn early. Possible reasons include:
- Market sentiment fluctuations: The cryptocurrency market is highly sensitive to news and sentiment shifts. Negative rumors or updates can trigger panic and early withdrawals.
- Liquidity needs: Some investors may have needed to access their funds earlier than planned due to personal liquidity requirements.
- Shifting market expectations: Changes in market conditions or regulations may have led investors to adjust their strategies and adopt a more risk-averse stance.
vePENDLE Unlocks and Whale Activity
Data also shows that vePENDLE unlock volumes reached a significant peak in June and July 2024. The timing of Pendle’s TVL decline correlates with these unlock events. Large-scale token unlocks often increase selling pressure, as investors may anticipate price decreases and sell preemptively.
Moreover, the second-largest PENDLE whale—address 0xb262F75dbBff55F14E2a50e2d9d751E213C81ED0—deposited over 1 million PENDLE (worth more than $3 million) to Binance on July 8. On-chain data reveals that this address has been making similar high-value deposits since February, totaling $19 million in sales, with $11 million sold in April alone.
This whale activity exerted considerable downward pressure on the token’s price. From June 23 to July 8, PENDLE’s price fell from $6.17 to $3.45, a decline of about 44%.
Change in Token Holder Structure
On June 25, whale addresses held 71.2% of PENDLE tokens. By June 28, that proportion had dropped sharply to 4.7%, nearly a historical low. During the same period, retail holdings increased from 27.1% to 92.4%. This indicates that whale selling significantly influenced retail investor behavior, drastically altering the token’s holding structure.
Since June 30, whale holdings have gradually recovered, suggesting that some large holders are buying back or accumulating PENDLE. For retail investors, this may serve as a useful signal. However, due to the earlier selling pressure, the number of new buyers remains limited, with most activity coming from existing traders.
Typically, a sustained increase in new buyers—especially among recurring traders—signals a potential short-term price breakout. The opposite appears true for now.
Factors Behind PENDLE’s Sharp Price Drop
1. Increased Selling Pressure
As mentioned, large, frequent deposits by whales created intense selling pressure, driving the price down rapidly in a short period.
2. Prevailing Negative Market Sentiment
The constant influx of tokens into the market sustained a sense of panic, further depressing the price. Whale activity often psychologically impacts smaller traders, potentially triggering panic selling.
3. Conditions for a Rebound
If whale selling has peaked or is tapering off, a period of price stability may follow, potentially allowing the market to recover organically. Once the market absorbs these large sales and no new major selling pressure or negative news emerges, the price could stabilize and begin rebounding from a new support level.
Summary and Short-Term Outlook
Currently, the PENDLE token lacks strong momentum, and new buying volume is insufficient to form solid support. Short-term traders should remain cautious of broader market risks and avoid premature buying. long-term investors might consider accumulating positions gradually or using dollar-cost averaging to reduce risk.
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Future market recovery will depend on:
- Whether the market fully absorbs large sell orders.
- Monitoring other whales or large holders for similar selling behavior.
- Developments within the restaking sector (e.g., Eigenlayer) and changes in TVL, which could influence Pendle’s growth trajectory.
Despite recent volatility, Pendle’s strong fundamentals make it a project worth watching for long-term investors.
Frequently Asked Questions
What is Pendle Finance?
Pendle is a decentralized protocol that allows users to tokenize and trade future yield. It separates yield-bearing assets into Principal Tokens and Yield Tokens, providing more flexibility in managing risk and returns.
Why did Pendle’s TVL drop recently?
The drop was mainly caused by the expiration of multiple products on the platform and reduced airdrop incentives from restaking projects, leading users to withdraw their funds.
Should I invest in PENDLE after the price drop?
Short-term traders should exercise caution due to ongoing volatility. Long-term investors might see this as an accumulation opportunity, but should always do their own research and consider dollar-cost averaging.
How do whale movements affect PENDLE’s price?
Large sell orders from whales can significantly increase selling pressure, leading to rapid price declines. Conversely, whale accumulation can signal confidence and may support the price.
What is the outlook for Pendle?
While short-term momentum is weak, Pendle’s innovative model and position in the growing restaking sector could offer long-term potential if market conditions improve.
How can I track Pendle’s TVL and token metrics?
Platforms like DefiLlama and Dune Analytics provide updated dashboards with TVL, holder distribution, and trading volume data for informed decision-making.