Major assets withdrew and the coin price was halved. What happened to Pendle?

Original title: "TVL plummets, tokens are halved, what happened to Pendle?"

Original author: Gage, Mat, Darl, WolfDAO

Preface

Pendle Finance is an innovative interest rate derivatives protocol. Simply put, it separates principal and interest by splitting interest-bearing tokens (i.e., tokens that generate income when held) into principal tokens (PT) and yield tokens (YT). This mechanism allows users to choose different risk and return exposures according to their needs and manage their investments more flexibly.

In the past two years, Pendle has stood out from the fierce market competition and successfully become the well-deserved leading protocol in the LSDFi/Yield field. However, Pendle's TVL has recently fallen from nearly US$7 billion to US$3.4 billion, and the token price has also nearly halved.

This phenomenon has attracted widespread attention. Therefore, this article will analyze in detail the reasons for the decline in TVL and observe the impact on PENDLE tokens, in an attempt to summarize the future expectations of PENDLE tokens for readers' reference.

Event Overview

According to the latest Defilama data, on June 10, Pendle's total locked volume (TVL) climbed to a peak of US$6.7 billion. However, in the following two weeks, TVL fell sharply by 40%, and about US$3 billion of funds were withdrawn from Pendle. The main reason for this significant decline was that multiple financial products on the Pendle platform expired, causing users to choose to stop staking and withdraw.

Pendle TVL (Source: Defillama)

Detailed Analysis

Since June 26, Pendle users have withdrawn more than $3 billion in deposits, mainly from the withdrawal of Liquidity Restaking Tokens (LRT). By comparing the decline in the total locked volume (TVL) of these restaking protocols and the TVL trend of Pendle, it can be found that they all reached a peak between June and July and then gradually fell back.

ether.fi TVL（Source：Defillama）

Renzo TVL（Source：Defillama）

Swell TVL（Source：Defillama）

Zircuit TVL（Source：Defillama）

The LRT liquidity on the Pendle platform was significantly withdrawn, mainly affected by the following two factors:

· The expiration of products in the Pendle on-site market and automated market maker (AMM)

· Expectations for re-staking projects to airdrop are reduced or implemented (such as Ether.fi, Puffer, Renzo, etc.)

· For example, Ether.fi is about to launch Season2 airdrop.

Pendle's on-site products expired on June 27 (Source: Pendle official website)

Since Pendle's total locked volume (TVL) peaked on June 10, TVL has decreased by a total of about $3 billion by July 8. This sharp decrease mainly involves the withdrawal of some particularly important market assets, including Ether.fi's weETH, Ethena's sUSDE, Zircuit's token ezETH, and Renzo's assets, etc. The withdrawal of these assets is not just affected by a single factor, but the result of multiple factors.

Main asset withdrawal

For the withdrawal of major assets in the market, the possible reasons are:

1. Ether.fi's weETH withdrawal

Ether.fi recently announced that it will launch the Season2 airdrop, which may prompt investors to choose to cash in their earnings and withdraw their funds in advance. In addition, the market's lower expectations for airdrops may also cause some investors to wait and see, and then choose to temporarily exit the market.

2. Ethena's sUSDE and Zircuit's ezETH withdrawal

The expiration of deposits in these projects also made investors choose to withdraw from staking and recover funds. In addition, the platforms where these assets are located may face liquidity pressure, prompting investors to withdraw as soon as possible to avoid risks.

Why withdraw in advance?

In addition to the withdrawal of expired assets, many assets scheduled to expire in July, August, and September were also withdrawn in advance. Possible reasons are:

· Fluctuation of market sentiment: In the cryptocurrency market, investor sentiment fluctuates greatly. Once unfavorable news comes out of the market, it will cause panic, resulting in a large number of assets being withdrawn in advance.

· Liquidity demand: Some investors may choose to withdraw their funds in advance before maturity due to their own liquidity needs.

· Adjustment of market expectations: Investors adjust their investment strategies according to market and policy changes, and risk aversion sentiment increases.

Pendle daily trading volume (Source: sentio)

According to the situation in the figure below, the vePendle unlocking volume reached a significant peak in June and July 2024. It can be seen that the retracement time of Pendle TVL is also related to the vePENDLE unlocking time. The unlocking of a large number of tokens often brings market selling pressure. Investors may sell in advance because of the expected price drop, causing the price to fall, which may cause the expected pre-emptive selling pressure on the PENDLE token itself. The large-scale unlocking leads to an increase in the number of PENDLE tokens circulating in the market, and the price may fall in the case of oversupply.

vePENDLE unlocking status (Source: Dune)

On the other hand, the second largest PENDLE token holder, 0xb262F75dbBff55F14E2a50e2d9d751E213C81ED0, recharged more than 1 million PENDLE to Binance on July 8, worth more than 3 million US dollars (the left side is the deposit amount and price point, and the right side is the token change amount and value)

Giant Whale Address Shipping Operation 2024.7 (Source: Mest.io)

According to the on-chain data, this address has been recharging multiple high-value PENDLEs to Binance for sale since February this year, totaling 19 million US dollars, of which the sales amount in April was as high as 11 million US dollars.

Historical shipments of whales (Source: Mest.io)

As reflected in the token itself, the price has begun to fluctuate before the unlocking on June 27, and recently dropped 44% from the previous high of $6.17 on June 23 to $3.45 on July 8.

PENDLE price trend (Source: Coingecko)

Chips structure analysis

On June 25, the proportion of whale users in the market was as high as 71.2%, but by June 28, the proportion of whale users dropped sharply to 4.7%, almost reaching a historical low. During the same period, the proportion of retail investors increased from 27.1% to 92.4%. This shows that the selling behavior of whales has a significant impact on retail investors, and the chip structure in the market has changed dramatically.

PENDLE chips structure (Source: Dune)

Since June 30, the proportion of whale users' holdings has gradually recovered, indicating that some whale users have started to buy or build PENDLE positions again. For retail investors, this has a certain reference value. However, due to the huge selling pressure before, the number of new PENDLE buyers in the current market is relatively small, and most of them are repeat traders.

Generally speaking, when the number of new buyers shows signs of a breakthrough among repeat traders, this is often a signal of a short-term breakthrough in the token price, and vice versa.

PENDLE price plummets

1. Intensified large-scale selling pressure

As mentioned earlier, the frequent high-value recharges by whales are bound to cause huge selling pressure in the market, which will greatly affect the market price and cause it to fall rapidly in the short term.

The decline from $6.17 on June 23 to $3.45 on July 8 (about 44%) confirms the market's sensitivity to such large sell orders.

2. Market sentiment is generally under pressure

In the short term, due to the continuous influx of large amounts of tokens into the market, the panic mentality may continue, which will further depress the price of the currency.

The operation of whales is largely destructive to retail holders and small and medium traders, which may lead to continuous panic selling.

3. Conditions for a potential market rebound

If the whales' selling is at its peak or near the end, a short period of price stability and relaxation may occur, and the market may then recover.

Once the market confirms that the whales have completed the large-scale sell-off, the value of the remaining tokens may gradually recover and find a new balance point.

Summary and Outlook

1. Short-term observation

At present, PENDLE tokens lack sufficient momentum, and the new purchase volume cannot form obvious support. Therefore, in short-term operations, attention should also be paid to the risks related to the market to avoid potential losses caused by premature bottom-fishing. In contrast, long-term investors can consider building positions or fixed investments in batches, which are relatively lower risk and more secure.

Situation of new and old PENDLE traders (Source: Dune)

Future Factors

· Once the market digests these large transactions and there is no new major selling pressure or negative news, the price may gradually stabilize and start to rebound at the new support level.

· It is necessary to pay attention to whether other whales or large holders have similar signs of operation.

The landing and TVL changes of restaking track targets (such as Eigenlayer) may have a certain impact on the development of Pendle. Investors should pay attention to relevant data and adjust their investment strategies flexibly. However, considering the good fundamentals of Pendle, PENDLE is still an investment target worthy of attention and selection in the long run.

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