Podcast Ep.332ㅡ‘CME in the DeFi Interest Rate Market’, Is Pendle's next strategy to buy back shares?

Pendle (펜들) is one of the most influential DeFi protocols in the on-chain yield trading market. By 2025, it ranked within the top 20 by TVL (Total Value Locked), holding the 13th position, just behind Uniswap. Throughout 2025, its average TVL reached $5.7 billion, with total fees of $44.6 million, and user returns amounting to $34.9 million. Notably, Pendle expanded yield trading into the DeFi space through its innovative “yield tokenization” feature, which separates fixed and floating yields and tokenizes them.

However, its token performance has been underwhelming. The PENDLE token price has fallen over 62% since early 2025, and when denominated in BTC and ETH, it also performed poorly, dropping more than 50%. Although over one-third of the circulating supply is locked in vePENDLE with an average lock-up period of 395 days—indicating a long-term committed investor base—it has also been pointed out that this limits liquidity.

Pendle’s core competitiveness is based on two main business segments. The first is yield-based trading enabled by the v2 architecture. Since its comprehensive expansion in 2023, Pendle v2 has addressed liquidity fragmentation issues through the “Standardized Yield (SY)” wrapper, making yields of various assets tradable. The second is Boros (보로스), launched independently in August 2025. Boros is the first on-chain protocol to tokenize and enable trading of funding rates (the variable interest rates used to maintain leverage in perpetual contracts). Last year alone, it recorded over $300,000 in fees and $6.9 billion in nominal trading volume.

Although Boros currently accounts for only about 0.1% of open interest in perpetual contracts, some analysts suggest that if it captures 2% to 10% of the entire crypto derivatives market, Pendle’s fee income could potentially increase by approximately 15%. This indicates that PENDLE’s revenue structure might shift from a TVL-centric model to a more trading-centric one.

On the other hand, there are predictions that Pendle’s tokenomics may enter a new phase. Previously, users had to lock tokens via the vePENDLE model to earn fee sharing and emission voting rights, but this structure has limitations, notably forcing liquidity buyers into long-term non-liquid states. Recently, the DeFi industry has seen a shift towards share buyback models, which could expand demand pools for “non-locking funds,” with precedents set by major protocols including Hyperliquid.

Pendle’s strong performance in 2025 is closely related to leverage cycle strategies based on Ethena and Aave, as well as growth in the stablecoin market. With PT tokens being incorporated into Aave as collateral, users can leverage strategies involving PT as collateral and reinvesting in YT positions. However, after the incentive season ended in September, rewards sharply declined, TVL dropped rapidly, and with the overall crypto market crash in October, demand for v2 also decreased.

Pendle charges 80% of trading fees and 5% of YT yields, with 80% of these distributed to vePENDLE holders. However, because its revenue heavily depends on TVL and yield volatility, breaking free from the cyclical incentive season model and establishing a sustainable fee base is considered a core challenge. Therefore, the success or failure of Boros appears to be critical to the long-term stability of Pendle’s revenue structure.

According to Alea Research, short-term challenges can be summarized as two points: first, whether Boros, with its product-market fit, can successfully establish a trading-centered revenue structure; second, whether it can achieve a tokenomics shift that departs from the existing ve model and addresses structural liquidity limitations. In the context of a winner-takes-all landscape in the yield tokenization market, circulation density and asset integration breadth are entry barriers for Pendle and key factors for ecosystem expansion.

Considering the size of the fixed income market, if Pendle attempts to expand into traditional finance (TradFi), it would need to develop additional infrastructure such as KYC (Know Your Customer), compliance, and legal structuring. Even if this expansion is not successfully realized, it is expected that Pendle will still maintain a leading position within the “crypto-native DeFi” space.