Pendle cycle overview: Liquidity and trading volume surge, whales’ focus has shifted to short-term funding pools

Pendle’s performance during Arbitrum’s STIP

Through the SY token, Pendle provides an innovative yield trading protocol that allows users to trade principal (PT) and yield (YT) tokens, enabling a diverse yield management strategy.

The STIP program’s 2 million ARB incentive allocation strategy, focusing on 55% liquidity, 40% trading, and 5% ecosystem integration, significantly increased the liquidity and trading volume of the Pendle platform. Liquidity surged from $52 million to $723 million, while weekly trading volume also soared from $4 million to $450 million, far exceeding expectations. Although new user growth was relatively slow before the launch of LRT, the STIP program successfully attracted 4,489 wallets to participate, achieving a broad and balanced distribution of rewards.

Chaos Labs' analysis revealed positive results, including improved protocol upgrades, transparency of incentive standards, effectiveness of incentive integration, and active iteration and experimentation. However, the analysis also pointed out areas for improvement, such as strengthening new user acquisition and re-evaluating the ROI of ecosystem integration. Finally, Pendle's STIP program not only brought significant positive impacts on liquidity and trading volume, but also provided experience and lessons for future incentive programs.

Pendle LP's High-Efficiency Mining

Pendle Finance occupies a leading position in the DeFi field with its excellent liquidity mining efficiency, providing five top-level funding pools for investors to choose from. First, Ethena Labs' sUSDe provided the dual advantages of income plus Sats on October 24 and December 26, respectively. Although the latter has a slightly lower yield, it provides longer-term Sats income. Next up is Dolomite’s dUSDC, which has become a leader in stablecoin farming with double-digit yields and zero immediate loss (IL) on Arbitrum.

Ethena Labs’ USDe also performs well on Arbitrum, and although it has no yield itself, it can bring additional Sats income on Pendle. Swell Network’s rswETH has improved its yield efficiency by 8.5 times, and although it is slightly short of EigenLayer points, the additional Pearls income is more than enough to make up for it.

Finally, Bedrock DeFi’s uniETH provides a lesser-known but valuable LRT option on Arbitrum, and investors can further increase their returns and points through Pendle liquidity mining. It is worth noting that Pendle liquidity mining has no immediate loss if held to maturity, and the points come from the underlying asset part, while PT does not receive points. At the same time, investors need to be aware of the existence of standard contract risks when participating in Pendle liquidity mining, and make it clear that this information does not constitute any financial advice.

Whales’ preference for Ethena and stablecoin pools

0x520 invested $20 million in PT-sUSDe assets on July 23, with an estimated total profit of $750,000. Since July 10, 0x6e2 has invested 8,026 ETH in PT-weETHs at a fixed annualized rate of return of 12%-13.5%, with an estimated profit of 104 ETH. 0x171 spent $4.8 million on PT-sUSDe at a fixed annualized rate of return of 15.88%, with an estimated profit of $187,000, and has accumulated a PT-sUSDe position of $13.8 million.

The 0xf0b address added 6,702 ETH to the eETH liquidity pool and has been doing liquidity mining in the same pool since the end of June. The 0x555 address has added 2,082 wETHs of PT-weETHs since the end of June, buying at a fixed annualized rate of return of 11.8%-12.7%, with a total investment of 4,173 wETHs, and an expected profit of 63 wETHs in less than 2 months. In the week before the July 25 expiration, the 0xb99 address added $27.3 million of PT-sUSDe, realized a profit of $1.08 million from PT redemptions, and also had a $5.5 million PT-sUSDe position. The 0xeca address spent $2.5 million to buy PT-sUSDe, and an expected profit of about $70,100 in less than 2 months.

With the expiration of Pendle assets on July 25, whales' attention has shifted to short-term pools, especially sUSDe from PT and LP. For ETH, they seem to prefer Ether.fi's LRT weETH.

In addition, the market's interest in Ethena and stablecoins has prompted us to plan to launch a new ENA pool as well as gUSDC, which will provide users with an efficient mining opportunity.

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