Forward the Original Title ‘In-Depth Analysis: How Pendle is Reshaping the DeFi Fixed Income Space’

As the stablecoin market grows and tokenized assets multiply, Pendle is well-positioned to become the fixed income layer that powers the next wave of asset issuance.

Pendle Finance ($PENDLE) has emerged as DeFi’s dominant fixed yield protocol, enabling users to trade future yield and lock in predictable on-chain returns. In 2024, it powered major narratives like LSTs, restaking, and yield-bearing stablecoins—solidifying its role as the launch platform of choice for asset issuers.

In 2025, Pendle is expanding beyond its Ethereum roots and evolving into a full-stack fixed income layer for DeFi, targeting new markets, products, and user segments across both crypto-native and institutional capital.

The on-chain yield derivatives market mirrors one of TradFi’s largest segments: interest rate derivatives, a $500+ trillion market. Even modest on-chain adoption represents a multi-billion dollar opportunity.

Source: Bank for International Settlements (BIS)

While most DeFi platforms offer only variable yields—exposing users to market volatility—Pendle introduced fixed-rate products through a transparent and composable system.

This innovation has reshaped the $120 billion DeFi landscape, positioning Pendle as the dominant yield protocol. In 2024 alone, it grew 20x, capturing over 50% of TVL in the yield sector—five times more than the next largest competitor.

Source: Pendle (Medium)

Pendle isn’t just a yield protocol—it’s evolved into core DeFi infrastructure, serving as a key liquidity driver for some of the ecosystem’s largest protocols.

Product-Market Fit Through Narratives: From LSTs to Restaking

Pendle gained early traction by solving a key issue in DeFi: volatile, unpredictable yields. Unlike Aave or Compound, it lets users lock in fixed returns by separating principal from yield.

Its adoption surged with the rise of LSTs, helping users unlock liquidity from staked assets. In 2024, Pendle captured the restaking narrative—its eETH pool became the platform’s largest just days after launch.

Pendle’s infrastructure now plays a critical role across the yield ecosystem. Whether it’s providing hedging tools for volatile funding rates or acting as a liquidity engine for yield-bearing assets, Pendle is uniquely positioned to benefit from growing segments like LRTs, RWAs, and on-chain money markets.

Pendle V2: Infrastructure Upgrade

Pendle V2 introduces Standardized Yield (SY) tokens to unify how yield-bearing assets are wrapped. This replaces V1’s fragmented, custom integrations and enables seamless minting of Principal (PT) and Yield Tokens (YT).

Source: Pendle Finance. “How SY tokens are split into PT and YT tokens.” Pendle Documentation

The AMM in V2 is purpose-built for PT-YT trading, offering improved capital efficiency and pricing. V1 used a general AMM model, but V2 introduces dynamic parameters like rateScalar and rateAnchor to adjust liquidity over time. This leads to tighter spreads, better yield discovery, and lower slippage.

For liquidity providers, V2 offers stronger protections. Pools now consist of highly correlated assets, and the AMM design minimizes impermanent loss, especially for LPs who hold until maturity. In V1, LPs had less predictable outcomes due to less specialized mechanics.

Breaking Beyond EVM: Solana, Hyperliquid, and TON

Pendle’s planned expansion to Solana, Hyperliquid, and TON marks a major inflection point in its 2025 roadmap. Until now, Pendle has been limited to EVM-based ecosystems, where it already dominates the fixed yield sector with over 50% market share.

But the next wave of growth in crypto is increasingly multi-chain—and Pendle’s move to break out of the EVM silo via its Citadel deployments positions it to tap into entirely new pools of capital and users.

Source: Pendle (Medium)

Solana has become a major hub for DeFi and trading activity, with over $14B in TVL at its all time highs in January, a strong retail user base, and a rapidly growing LST market.

Source: DeFiLlama (defillama.com)

Hyperliquid, with its vertically integrated perp infrastructure, and TON, with its Telegram-native user funnel, offer high-growth opportunities underserved by sophisticated yield infrastructure. Pendle could fill that gap.

If successful, these deployments could significantly expand Pendle’s total addressable market. Capturing fixed yield flows in non-EVM chains—especially as these ecosystems mature—could translate into hundreds of millions in incremental TVL. More importantly, it would reinforce Pendle’s position not just as an Ethereum-native protocol, but as DeFi’s fixed income layer across all major chains.

Source: Grand View Research

Citadel for TradFi: Structuring Regulated Yield Access

Another key catalyst in Pendle’s 2025 roadmap is the launch of a KYC-compliant Citadel designed specifically for institutional capital. The goal is to bridge on-chain yield opportunities with regulated capital markets by offering structured, compliant access to crypto-native fixed income products.

Source: Pendle (via Medium publication)

The initiative involves partnerships with protocols like Ethena to create isolated SPVs managed by regulated investment managers. This setup removes key friction points around custody, compliance, and on-chain execution—enabling institutions to gain exposure to Pendle’s yield products through a familiar legal structure.

With global fixed income markets exceeding $100 trillion, even small institutional shifts toward on-chain adoption could translate into billions in inflows. A 2024 EY-Parthenon survey found 94% of institutional investors believe in the long-term value of digital assets, with over half increasing allocations.

Source: EY-Parthenon, “Evolving Investor Sentiment on Digital Assets,” 2024.

McKinsey & Company projects tokenized markets could reach $2–4 trillion by 2030. Pendle, while not a tokenization platform, plays a crucial role in the stack by enabling price discovery, hedging, and secondary trading for tokenized yield. Whether it’s tokenized T-bills or yield-bearing stablecoins, Pendle can serve as the fixed income layer for institutional-grade strategies.

Source: McKinsey & Company, “What is Tokenization?,” 2024.

Citadel for Islamic Finance: A $4.5T Market Opportunity

Pendle also plans to launch a Shariah-compliant Citadel to serve the global Islamic finance market—an industry estimated at $4.5 trillion, with presence in over 80 countries. This sector has grown at a 10% CAGR over the past decade, particularly in Southeast Asia, the Middle East, and Africa.

Source: ICD-LSEG, “Islamic Finance Development Report,” 2023.

Strict religious restrictions have historically limited DeFi’s accessibility to Muslim investors. But Pendle’s PT/ YT architecture could offer the flexibility to develop yield products aligned with Shariah principles, potentially resembling Sukuk (Islamic bonds).

If successful, this Citadel would not only extend Pendle’s geographic reach, but also prove DeFi’s ability to adapt to diverse financial systems—solidifying Pendle’s role as global fixed income infrastructure for on-chain markets.

Pendle’s Strategic Leap into Perpetual Yield Markets

One of the most important catalysts in Pendle’s 2025 roadmap is Boros—a new vertical that brings fixed-rate trading to perpetual funding yields. While Pendle V2 established the protocol as a leader in spot yield tokenization, Boros expands its reach into the largest and most volatile yield source in crypto: perp funding. With over $150 billion in open interest and $200 billion in daily volume across perpetual markets, this is a massive but underhedged segment.

Boros enables fixed funding rates, offering crucial stability for protocols like Ethena. This is essential for institutions managing large-scale strategies.

Source: Pendle (via Medium publication)

For Pendle, the upside is enormous. Boros unlocks a multi-billion dollar market that was previously out of reach. It also shifts Pendle’s narrative—from a DeFi yield app to the on-chain equivalent of a TradFi interest rate desk, similar to what CME or J.P. Morgan offer.

Boros also strengthens Pendle’s long-term edge. Rather than chasing trends, Pendle is laying the groundwork for future yield infrastructure. With use cases like funding rate arbitrage and cash-and-carry strategies, it provides real tools for traders and treasuries.

And because there’s no scalable funding hedge solution yet—either in DeFi or CeFi—Pendle has a clear first-mover edge.

If successful, Boros could dramatically expand Pendle’s market share, attract new user segments, and solidify its role as DeFi’s fixed income layer.

Leadership and Strategic Partnerships

Pendle Finance was founded in mid-2020 by a pseudonymous team known publicly as TN Lee, GT, YK, and Vu. Since inception, it has attracted backing from prominent investors including Bitscale Capital, Crypto.com Capital, Binance Labs, and The Spartan Group.

Source: Pendle Finance Official Website

To support its development and expansion, Pendle has completed several funding rounds:

• Private Token Sale (April 2021): Raised $3.7 million from investors such as HashKey Capital, Mechanism Capital, and Crypto.com Capital.
• Initial DEX Offering (IDO) (April 2021): Secured $11.83 million at a token price of $0.797, achieving a peak ROI of 5.43x.
• Binance Launchpool (July 2023): Distributed 1.94% of total token supply through Binance’s Launchpool program.
• Strategic Investment from Binance Labs (August 2023): Binance Labs invested to accelerate Pendle’s ecosystem growth and cross-chain expansion.
• Arbitrum Foundation Grant (October 2023): Awarded a $1.61 million grant to support development on Arbitrum.
• Strategic Investment from The Spartan Group (November 2023): Additional funding was secured to strengthen long-term growth and institutional adoption.

Pendle has actively partnered with leading protocols to expand its ecosystem and bring fixed yield trading to a broader range of assets and networks. Key collaborations include:

• Base (L2 by Coinbase): Deployed Pendle on the Base network, unlocking access to Base-native assets and extending Pendle’s fixed yield infrastructure to a growing user base.
• Anzen (sUSDz): Listed the RWA-backed stablecoin sUSDz on Pendle Base, enabling fixed yield trading tied to real-world yields—marking Pendle’s first community-listed integration with a real-world asset.
• Ethena (USDe/sUSDe): Integrated USDe and sUSDe with high APYs and reward incentives, bringing crypto-native stablecoin yields into Pendle and strengthening its alignment with one of DeFi’s fastest-growing protocols.
• Ether.fi (eBTC): Launched the first BTC-native yield pool through eBTC, expanding Pendle’s reach beyond ETH-based assets and enabling fixed yield exposure on Bitcoin.
• Berachain (iBGT/iBERA): Most recently, Pendle launched on Berachain with native Infrared LSTs, establishing the core fixed yield infrastructure to bootstrap Berachain’s DeFi ecosystem from day one.

Tokenomics

The $PENDLE token is central to Pendle Finance, enabling governance and interaction across the protocol. By allowing users to separate yield-bearing assets into principal and yield components, Pendle creates new strategies for yield management—with $PENDLE providing the tools to access and shape this ecosystem.

As of March 31, 2025:

● Price: $2.57

● Market Cap: $410.6 million

● Fully Diluted Valuation (FDV): US$725.2 million

● Circulating Supply: 161.31 million (57.3% of max supply)

● Max/Total Supply: 281,527,448 PENDLE

$PENDLE emissions have been decreasing by 1.1% each week since September 2024, when the weekly emission stood at 216,076 tokens. After 29 weeks of reductions, the current emission rate is approximately 156,783 tokens per week. This schedule will continue until April 2026, after which the protocol will adopt a terminal inflation rate of 2% per year to maintain long-term incentives.

Source: Pendle Tokenomics – Emissions & Supply Schedule

Boosting Utility Through vePENDLE

Pendle improves governance and decentralization through $vePENDLE, a vote-escrowed version of the $PENDLE token. Users receive $vePENDLE by locking their tokens for up to two years. The longer and larger the lock, the more $vePENDLE received. Over time, $vePENDLE decays linearly to zero, at which point the locked $PENDLE is unlocked.

Source: Pendle Tokenomics

This locking mechanism reduces circulating supply, supports price stability, and aligns long-term incentives across the ecosystem.

Benefits of vePENDLE Holders

• Voting power in protocol decisions
• Yield fee distributions
• Exclusive incentives and airdrops

In 2024, active vePENDLE holders earned an average ~40% APY, excluding $6.1M in airdrops distributed in December alone.

Source: Pendle (via Medium publication)

Pendle Protocol generates value primarily through:

• Yield Trading (YT) Fees: Collecting 3% of the yield accrued from interest-bearing tokens.
• Swap Fees: Charging between 10 to 30 basis points (bps) per transaction, depending on the specific liquidity pool.
• Expired PT Yields: Distributing a portion of yields from matured but unredeemed Principal Tokens (PTs) pro rata among vePENDLE holders.

Currently, Pendle allocates 100% of its protocol revenue directly to vePENDLE holders, with no funds reserved for the Pendle treasury. However, this allocation model may evolve to include treasury contributions in the future.

As Pendle continues to scale via V2, Citadels, and Boros expansions, vePENDLE holders will benefit from increased value accrual—reinforcing vePENDLE’s central position within the Pendle ecosystem.

Key Risks and Challenges

Despite Pendle’s strong positioning in the DeFi ecosystem, several risks remain. The protocol’s complexity presents a barrier to broader adoption, particularly among users unfamiliar with yield trading mechanics. Unlocking the next wave of growth will require ongoing efforts to simplify the user experience and reduce the learning curve around PTs, YTs, and fixed yield strategies.

Without sufficient context, the high concentration of Pendle’s current TVL in Ethena pools may also be perceived as a risk. Nonetheless, Pendle’s role as a yield-focused DEX has enabled it to remain nimble and responsive to shifting market narratives. In 2024, over 60% of Pendle’s TVL was allocated to ETH Liquid Restaking Tokens (LRTs). By 2025, that composition had shifted, with more than 60% now concentrated in stablecoin and synthetic dollar pools—reflecting evolving market demand.

Source: DeFiLlama (defillama.com）

Additional considerations include smart contract risk, oracle reliability, and market risk from underlying asset volatility. Low liquidity in certain pools may also lead to slippage or reduced capital efficiency for users seeking to exit positions.

Lastly, Pendle’s recent growth has been supported in part by airdrop and points-driven incentives. As these programs taper off, sustained traction will rely more on the protocol’s intrinsic utility, diverse yield sources, and the continued rollout of new products like Boros and multi-chain Citadels.

Closing Remarks

While market cycles often cause investor sentiment and attention to fluctuate, Pendle continues to build with a long-term vision. Its ability to offer customizable, fixed-yield strategies places it at the forefront of DeFi innovation—empowering users to manage volatility, hedge effectively, and unlock predictable returns. This positions Pendle as a natural bridge between traditional financial sophistication and the composability of on-chain markets.

Looking ahead, Pendle’s 2025 roadmap offers a clear path toward broader adoption and deeper liquidity. Continued success will depend on simplifying the user experience and diversifying beyond short-term narratives.

As stablecoin markets expand and tokenized assets multiply, Pendle stands to benefit from being the fixed yield layer powering the next wave of asset issuance. Its strength in recent months reflects clear demand and market conviction. If execution remains strong, Pendle is well-positioned to become a core pillar of DeFi’s fixed income future.

To stay up to date on the latest developments in the Pendle ecosystem, here are some relevant accounts worth following:

@pendle_fi @imkenchia @PendleIntern @crypto_linn @degens_grandma @tn_pendle @DeFi_Perryy

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