DeFi
DeFi Protocol Pendle’s TVL Drops 40% in a Week, What’s Behind the Exodus?
Over the past week, Pendle, a popular DeFi protocol that led the EigenLayer boom, has seen a 40% drop in total value locked (TVL). At one point, Pendle had managed to amass over $6 billion in user deposits, but has now lost nearly a third of that sum. Since last Wednesday, users have withdrawn $3 billion of Pendle’s deposits, much of which belongs to liquid re-staking tokens. On Monday, the value of user deposits in DeFi Pendle Protocol was $3.7 billion.
What is behind this recent exodus on Pendle?
Speaking to DL News, Kairos Research founder Ian Unsworth noted that the recent exits were partly due to some products maturing. “It just so happened that it aligned perfectly for the top five LRTs all at the same time,” he added.
However, some of these outflows could also be attributed to the airdrop phenomenon that often fuels the boom and bust cycles of different protocols. Last Thursday, Pendle faced the big deadline of June 27 with the conclusion of Pendle markets for tokens such as Ether.Fi’s eETH, Puffer’s pufETH, Renzo’s ezETH, Kelp’s rsETH, and Swell’s rswETH.
While investors were able to reinvest these tokens in the new Pendle markets, the returns were not as attractive as before. This is partly because many had invested in DeFi EigenLayer Protocol and its associated projects, such as Pendle, to position itself for anticipated airdrops – free tokens distributed to loyal early adopters. However, many of these airdrops have already happened
In May, early adopters of EigenLayer claimed a share of the $1.6 billion native EIGEN TokensOn the other hand, liquid resttaking protocols like Ether.Fi and Renzo, which offered access to the EigenLayer, airdropped their tokens in March and April, respectively.
All three projects will distribute their tokens in successive seasons, and users will always have the opportunity to claim a share of future airdrops.
Read also : EigenLayer’s EigenDA Unveils Whitelist Security Against Sybil Attacks
Users reduce risks
Unsworth said the upcoming airdrop would be slightly smaller, so some participants may have considered reducing their risk. “Also, the Renzo Points program ends at the end of July, so I think a lot of people are probably taking a moment to think about whether or not they want to lock up their tokens again,” he said. added.
Pendle’s outflows have affected other protocols like Zircuit. As a result, Zircuit’s value has dropped by 15% over the past week. On the other hand, Pendle’s native token, PENDLE, has dropped by 17% over the past week and is currently trading below $5.0.