DeFi Protocol Pendle’s TVL Drops 40% In A Week, What’s Behind the Exodus?

• DeFi Protocol Pendle’s TVL dropped 40% from over $6 billion to $3.7 billion, primarily due to the maturity of liquid re-staking tokens.
• The outflows are to the maturity of several Pendle markets and the completion of major airdrops.
• The massive withdrawals from Pendle have also affected other protocols like Zircuit.

Over the last week, Pendle, a popular DeFi protocol that led the EigenLayer boom, witnessed a 40% drop in the total-value-locked (TVL). 

At one point, Pendle had managed to gather more than $6 billion in user deposits but has now lost nearly one-third of that. 

Since last Wednesday, users have withdrawn $3 billion from Pendle deposits, a large part of it belonging to liquid re-staking tokens. As of Monday, the value of the user deposits in DeFi protocol Pendle was $3.7 billion.

After major token maturity last Thursday, investors have decided to hold back from rolling their tokens back into Pendle citing unattractive returns. Users are also derisking as they anticipate smaller future airdrops

What’s Behind This Recent Exodus on Pendle?

Speaking to DL News, Kairos Research founder Ian Unsworth noted that the recent outflows were partly due to some products reaching their maturity. 

“It just so happened that this perfectly lined up for the top five LRTs all at the same time,” he added.

However, part of these outflows could also be attributed to the airdrops phenomenon which often drives the boom-and-bust cycles for different protocols. 

Last Thursday, Pendle faced the big June 27 maturity with the conclusion of the Pendle markets for tokens such as Ether.Fi’s eETH, Puffer’s pufETH, Renzo’s ezETH, Kelp’s rsETH, and Swell’s rswETH.

Although investors had the option to roll back these tokens into the new Pendle markets, the returns weren’t as attractive as before. 

This is partly because many had invested in DeFi protocol EigenLayer and its associated projects, like Pendle, to position themselves for anticipated airdrops—free tokens distributed to early and loyal users. However, many of these airdrops have already occurred

In May, the early users of EigenLayer claimed a slice of the native $1.6 billion worth of EIGEN tokens. 

On the other hand, liquid restaking protocols like Ether.Fi and Renzo, which offered access to the EigenLayer, airdropped their tokens in March and April, respectively.

All three projects will be distributing their tokens in successive seasons and users will still have the opportunity to claim a slice of the future airdrops.