Pendle Finance continues to ascend to the top of the decentralized finance (DeFi) sector. The total value locked (TVL) of the protocol reached a new record on June 11 at $6.71 billion. For a while, Pendle became the fifth-largest DeFi project by TVL, according to data tracked by DefiLlama.
As of this writing, Pendle is contending for the fifth position with JustLend and Ether.fi. Both Pendle and JustLend currently have a TVL of $6.5 billion, followed by Ether.fi with $6.3B.
Pendle TVL has surged 2,700% since the start of the year. At the beginning of January, $233 million worth of crypto was locked with the protocol.
Pendle Finance is a DeFi project that enables users to tokenize future yields from DeFi assets. The yield can be converted into tokens and traded on Pendle’s Automated Market Maker (AMM) exchange.
The protocol separates DeFi investments into principal tokens (PTs), which represent the underlying asset, and yield tokens (YTs), which represent the asset’s yield. Both the yields and principal can be traded on Pendle’s open market. This provides DeFi yield farmers with new strategies for speculating on yield and locking in future yield rates.
The protocol’s approach can be compared to how interest rate derivative markets work in traditional finance.
One of the main drivers behind Pendle’s rapid surge is the popularity of liquid restaking tokens, with Pendle users being able to speculate on EigenLayer yields and points. Pendle developer RightSide told Coindesk in March:
“The influx of interest in [Liquid Restaking Tokens] has been the main driver behind Pendle’s recent growth.”
Pendle supports six chains, including Ethereum, Arbitrum, Mantle, BNB Chain, Optimism, and Avalanche. Ethereum accounts for about 90% of the TVL on the protocol, with WETH, EETH, and USDE being the three most popular crypto assets locked with it.
The protocol’s native token is PENDLE, with a market cap of $836 million.
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