Pendle, the yield trading protocol, is taking strategic steps to reverse a significant 40% decline in its total value locked (TVL). To attract liquidity providers (LPs), Pendle has introduced new pools on the Arbitrum network. These pools are targeting holders of UNI, LINK, ETH, WBTC, CRV, CVX, USDT, and USDC.
Partnership with Karak Network
Additionally, Pendle has partnered with the restaking protocol Karak Network. This partnership allows depositors to place Pendle’s Principal Tokens (PT) on Karak’s platform and earn Karak points (XP). “Earn additional rewards on top of Karak XP with your PT-weETH, PT-rsETH, and PT-ezETH,” Pendle tweeted.
Factors Leading to TVL Decline
The TVL drop, from a peak of $6.2 billion to $3.7 billion, was triggered by the maturation of several large liquid restaking markets on June 27. Concurrently, the protocol’s PENDLE token plummeted 50% before recovering some losses amid the ongoing crypto rally.
Understanding Pendle’s Tokens
On Pendle, Liquid Restaking Tokens (LRTs) are split into Principal Tokens (PTs) and Yield Tokens (YTs). When users stake assets like ETH, they receive PT-ETH, which can be converted back to ETH when the staking period ends. YTs represent the rewards earned from staked assets and can be traded separately.
Impact of EigenLayer’s Token Generation Event
Activity on Pendle peaked ahead of EigenLayer’s highly anticipated token generation event (TGE) as users sought to maximize their EIGEN airdrop allocations. Lee explained that the maturity of these LRT pools, launched earlier this year, led to nearly $4 billion leaving the protocol.
Insight from Crypto Analyst
Crypto analyst and influencer 2Lambroz.eth explained that Karak supports two types of EtherFi assets: eETH(Karak) and weETHk. eETH(Karak) refers to EtherFi’s LRT that’s been wrapped and deposited directly into Karak. weETHk, on the other hand, represents a mix of different LRTs and LSTs deposited into Karak through EtherFi. Both yield the same points from EtherFi, but weETHk offers users twice as many points from Karak and additional VEDA points.