Pendle Finance hits nearly $4 billion in TVL amid novel-yield structure

Pendle Finance's total value locked (TVL) skyrocketed to $3.97 billion on Thursday following significant increases in the protocol's fees and trading volume, according to data from DeFiLlama. The significant increase follows an influx of tokens from restaking protocols leveraging Pendle to improve their yields.

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Pendle continues growing

Pendle Finance has recorded a more than 1,500% growth since the beginning of the year, climbing from a mere $233 million to $3.97 billion on Thursday, according to data from DeFiLlama. As a result, Pendle is now the largest DeFi yield protocol in the crypto market.

Dune analytics dashboard shows Pendle's trading volume has crossed the $10 billion mark, and trading fees have risen more than 600% in the past four days. Much of this growth is attracted by Pendle's high-yield structure.

Pendle introduces a novel yield-bearing mechanism by tokenizing yields through a process that splits the yield-bearing assets into principal tokens (PT) and yield tokens (YT). This allows for the trading of yields among traders. At the time of writing, Pendle's average yield sits at around 59.6% in the past 24 hours.

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Restaking protocols catalyzing growth for Ethereum

Pendle's growth follows Ethereum's restaking boom, as most of the tokens on its platform come from restaked Ethereum in protocols like EtherFi and Renzo. Its recent fee spike can also be traced to the increased trading of yield tokens related to Ethena's synthetic Dollar, USDe.

Ethena garnered attention after its airdrop tokens went live on Tuesday. USDe's growth on Pendle indicates investors are becoming aware of Ethena's high yields and are realizing they could leverage that for even more yields through Pendle pools.

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Despite the increased activity, Pendle's price has yet to peak. Its total value locked is multiples of its market capitalization, which is just $517 million. At the time of writing, Pendle is trading at $5.55, up over 10% on Thursday.

While high yields from restaking can be attractive, Coinbase analysts raised concerns on Tuesday about the risks in restaking protocols and how too much repurposing of liquid restaking can be dangerous.

Traders are advised to perform their due diligence before engaging in trading of crypto assets.