LRT derivatives expire + re-pledge craze subsides! Pendle’s locked position value has shrunk by 40%!

Pendle, the on-chain interest derivatives market, has seen its total value locked (TVL) drop significantly in the past week. TVL dropped 40% to $3.7 billion from $6.18 billion on June 27. The main reason is the expiry of certain liquid pledged derivatives earlier this year.

The significant decrease in TVL is closely related to the expiration of LRT derivatives

Pendle’s significant decrease in TVL is closely related to the expiration of the liquid re-pledge market, including Ether.Fi’s eETH, Renzo’s ezETH, Puffer’s pufETH, Kelp’s rsETH and Swell rswETH. These liquid re-hypothecation derivatives expired on June 27, which had a significant impact on the protocol’s locked position value.

Pendle Finance income tokenization platform

Investors can use Pendle Finance to bring the concept of separation of principal and interest from traditional finance into Web3. They can purchase zero-interest assets or income-earning assets, but in Pendle Finance it is called:

• Principal Token (PT): represents the underlying asset. After expiration, PT can redeem the underlying asset at a one-to-one ratio. For example, 1PT-stETH can redeem stETH worth 1ETH.

• Yield token (YT): You can obtain the income generated by the underlying assets. For example, holding 10 YT-stETH allows investors to obtain all the income from the 10 ETH deposited in Lido.

In addition to using ETH and USDC to purchase the above tokens, investors can also choose to directly use interest-earning underlying assets to purchase (such as stETH), and then automatically complete the conversion through the AMM mechanism in the protocol. This time, the funds in Pendle expired after the predetermined period, affecting the dynamics of the platform.

Liquid Restaking Tokens (LST) bring huge returns to Pendle

In the first half of this year, Pendle saw a large inflow of assets from the Liquid Restaking Protocol, mainly due to airdrops to projects such as EigenLayer Expect this increase to significantly lift Pendle TVL during the period.

Pendle’s Rollover function and its impact

In order to help users manage assets, Pendle has imported the Rollover function to help users smoothly transfer liquidity to new pools. Pendle’s mechanism allows users to receive basic assets and income tokens. However, the expiration of certain liquid markets, as well as reduced interest in EigenLayer-related LRT, resulted in a significant decline in TVL.

Pendle is still trying to reach new heights and seize Symbiotic

Faced with the changing market, Pendle recently launched several new LRT markets through Mellow, focusing on another re-staking protocol Symbiotic, showing that Pendle is still looking for new opportunities Make efforts.

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