Pendle (PENDLE)

Pendle (PENDLE)

Most recent update: [April 25, 2024]

What is PENDLE?

Pendle is a DeFi protocol that allows users to deploy their own trading strategies to take advantage of segregated risk profiles of the components of an asset. The protocol divides assets into low-risk and high-risk components. This division enables users to buy and sell these components with various risk profiles without the permission of any middlemen. It features compatibility across different blockchain networks and incorporates automated market-making systems to facilitate efficient asset trading.

Who is behind PENDLE?

Pendle was developed by a team of pseudonymous founders known as TN Lee, GT, YK, and Vu. Based in South Korea, the project secured $3.7 million in funding from a range of investors, including Bitscale Capital, Crypto.com Capital, Fisher8 Capital, and Strategic Round Capital, among others. The project, which underwent extensive development, was officially launched in June 2021. According to its official website, Pendle has since achieved a trading volume of $12.7 billion and its total value locked (TVL) recently surpassed $4.4 billion. To support its ongoing growth and expansion, the Pendle team has significantly expanded since its launch.

How does it work?

Users deposits assets into Pendle to provide liquidity for other users to trade with. The deposited assets are split into components varying by risk profile. Traders can then buy or sell the components of their choice and exercise more flexibility in trading assets. The assets are traded on Pendle’s automated market maker (AMM) which uses math to determine asset pricing according to demand and supply, without any middlemen.

The PENDLE Token and Tokenomics

In the ecosystem of Pendle Finance, the native token is PENDLE. Holders can lock this token for up to two years to obtain several benefits, mainly governance participation where PENDLE holders have the power to vote on how rewards on the platform are distributed to liquidity providers.

As of October 2022, there were 235.89 million PENDLE tokens in circulation, with a weekly emission of 667,705 tokens. This emission rate is set to decrease by 1.1% weekly until April 2026, when the protocol will stabilize at an annual inflation rate of 2%. The token allocation have all been vested as of April 2023.

Security

The Pendle team prioritizes security and has conducted several audits to ensure the robustness of their system. The smart contracts of Pendle have been reviewed by Ackee, Dedaub, Dingbats, and leading wardens from Code4rena. Additionally, all of Pendle's smart contracts are available as open source.

Drawbacks and risks

Navigating the DeFi landscape, Pendle encounters inherent risks and hurdles, such as market volatility, regulatory shifts, and the complexities of novel DeFi trading protocols on the blockchain. Despite PENDLE's promising prospects, investors and users must remain aware of the risks associated with DeFi engagements, including the experimental nature of blockchain financial solutions and the unpredictable market dynamics.

Finally, as common to many ERC-20 tokens and more broadly Proof-of-Stake networks, their blockchain architecture dictates that those with the most staked/locked tokens will have the most sway in the network’s functioning. This effectively places richer wallets in a position of power. Thus, if one person or a group of entities can acquire 50% of the network’s voting power, they would be able to control it.

Due Diligence  

Before listing PENDLE on the VirgoCX Platform, VirgoCX performed due diligence on PENDLE and determined that PENDLE is unlikely to be a security or derivative under Canadian securities legislation. VirgoCX’s analysis includes reviewing publicly available information on the following: 

• The creation, governance, and location of PENDLE and/or its primary development team;
• The supply, demand, maturity and liquidity of PENDLE; and
• Legal and regulatory risks associated with PENDLE. 

Statutory Rights under Securities Legislation

VirgoCX is offering Crypto Contracts on crypto assets in reliance on a prospectus exemption contained in the exemptive relief decision Re VirgoCX Inc. dated May 30th 2022 (the Decision). Please be aware that the statutory rights in section 130.1 of the Securities Act (Ontario) and, if applicable, similar statutory rights under the securities legislation of each other province and territory in Canada do not apply in respect of the Crypto Fact Sheet to the extent a Crypto Contract is distributed under the prospectus relief in the Decision.

Further Reading

To learn more about the technology behind PENDLE, check out these in-depth resources here:

• The official site of PENDLE
• Coinmarketcap’s overview of PENDLE
• Coingecko’s overview of PENDLE
• Coinbase’s overview of PENDLE, along with the relevant news and blogs related to PENDLE.