Preface

The Pendle team was founded in the middle of 2020, when we were exploring how to introduce fixed interest rates into the crazy annual percentage yield (APY) of DeFi summer. Five years in the crypto world can be considered eternal, but this period of time has passed like a white horse’s stride.

I am proud of the achievements and challenges that our team has overcome so far, and we are ready to continue the momentum of growth. As the industry continues to evolve, we are in a unique position to seize new opportunities with our accumulated expertise and experience.

This article will outline the following:

· 2024 Milestone in Pendle

· Three Pillars of Pendle

· V2 version upgrade

· Building ‘Fortress’

· Boros new project

· Endgame Vision

Pendle V2 2024 Highlights

Establishing the Fixed Income Market

The year 2024 is a milestone year for Pendle. We have validated the strong demand for fixed income in the market and demonstrated that the protocol can scale from millions to billions.

At the beginning of 2023, our total value locked (TVL) was $230 million, which has soared to $4.4 billion by the end of 2024, a 20x increase. The growth in trading volume has been even more impressive, with the average daily volume jumping from $1.1 million in 2023 to $96.4 million in 2024, an increase of nearly 100 times. As users’ trust in the protocol grows, it is not uncommon for users to hold PT positions in excess of $100 million.

On June 26, 2024, we completed the largest ever expiry position processing: Pendle seamlessly settled expired positions worth $38 billion in just a few days.

If measured by TVL, Pendle’s scale is enough to make it the fifth largest blockchain, second only to Ethereum, Solana, Tron, and BNB Chain.

Pendle has proven its worth.

Today, Pendle’s TVL and trading volume have ranked among the blue-chip protocols of DeFi. We occupy over half of the ‘yield farming’ protocols on DefiLlama.

In 2024, we can confidently declare that Pendle has not only established yield trading as a separate track, but also made it one of the largest areas in the DeFi ecosystem.

DeFi Engine

In 2024, Pendle launched nearly 200 multi-asset, multi-term liquidity pools on 5 different chains, averaging 4 new markets added each week. By December 2024 peak, we were simultaneously operating 121 active markets, a 2.5x increase from the previous year.

But this is not just a victory in scale. These markets have become the core hubs for other projects to build deep liquidity.

Now, Pendle has become the launch engine for emerging tracks and protocols.

It turns out that Pendle is not only the liquidity hub of the protocol, but also the cornerstone of the growth of the entire DeFi ecosystem. At its peak, 48% of Ethena’s TVL (Total Value Locked) came from Pendle; for every 100 BTC re-staked in the BTCfi ecosystem, 42 are deposited through Pendle; Usual’s scale surged from 300 million US dollars to a peak of 1.2 billion US dollars, with about 30% of the growth contributed by Pendle.

Beneficiaries are not only the protocols - Arbitrum, Zircuit, Berachain and other ecosystems have also significantly enhanced liquidity through Pendle.

Pendle’s PT (Principal Token) has evolved into a sub-economy worth $1.2 billion, accounting for 3.3% of the total collateral in the EVM on-chain lending market. About 20% of the deposit assets on the Morpho platform come from Pendle.

Where there is yield, there is Pendle.

In the past year, we have made great strides in making Pendle a top-tier yield trading platform. But the mission is far from over - the journey continues.

Three Pillars of Global Expansion

V2 version upgrade

The size of the on-chain annual yield market is about 17.7 billion US dollars, of which only 4.97% (0.88 billion US dollars) of the yield is tradable through Pendle (i.e., ‘Pendled’). Pendle has established itself, but the market is still expanding, and the untapped yield potential far exceeds our current coverage.

We still have a long way to go before we reach the goal of ‘controlling the yield layer’, but the journey has begun.

The V2 version will help us narrow the gap through the following fundamental improvements:

1. Open Ecology

The essence of the protocol is permissionless. Multiple third-party protocols have previously deployed liquidity pools on Pendle through external development. We will open this feature through the UI to allow more participants to utilize Pendle technology to autonomously create yield markets. This dual-track strategy - growth through community-driven permissionless listings, supplemented by strategic screening by the business team - will help drive Pendle’s scalable expansion.

2. Dynamic Fees

Cost optimization is the focus of the future, aiming to balance the long-term interests of liquidity providers (LPs), users, and the protocol. We will implement a dynamic fee rebalancing mechanism to ensure that the pool is always in the optimal state during interest rate fluctuations.

3. vePENDLE Improvement

The functionality of vePENDLE will go beyond weekly on-chain voting and open up participation channels to all users, regardless of size. Optimizing the protocol interaction process for vePENDLE holders will also be a core goal for each business line (detailed later in this document).

Currently, the V2 version has withstood the test of time and will continue to serve as the core weapon for Pendle to conquer the DeFi yield market. Building on our existing achievements, we will drive product expansion with a more aggressive and ambitious strategy this year.

Thus, we move towards the next vertical domain - building ‘Citadels’ as the strategic outpost for the new generation of users.

Building ‘Fortress’

By 2024, Pendle had achieved a scale of 1 billion. And now, our goal is to reach the trillion-level.

Currently, Pendle only serves DeFi users in the EVM ecosystem. Despite the size and performance of the EVM market, we believe that Pendle should not be limited to this. Project “Fortress” aims to break through this boundary.

Where there is yield, there is Pendle.

Our goal is for Pendle to be at the core of users’ experience, no matter how they interact with the DeFi yield layer.

Currently, Pendle V2 only covers about 5% of DeFi’s yield market, but it has become one of the largest protocols. The interest rate derivatives market is $558 trillion – 30,000 times the size of today’s income market. If the Bastion were able to capture its tiny share, Pendle would expand exponentially.

We are exploring and advancing 3 “fortress” projects:

1. Non-EVM Eco PT Extension

The first “Fortress” outpost will promote the expansion of PT (Principal Token) beyond the EVM.

Non-EVM chains like Solana, TON, HYPE experienced explosive growth last year, attracting millions of potential users. By covering these ecosystems with a one-click fixed income portal, Pendle will quickly capture untapped opportunities and usher in a new wave of users.

2. Traditional Financial (TradFi) PT Layout

The second ‘Fortress’ will focus on compliant products, packaging returns for regulatory authorities, establishing distribution channels, and allowing traditional financial institutions to obtain the best fixed income from native encryption.

We will work with partners such as Ethena to jointly launch an independent special purpose vehicle (SPV) managed by compliant asset management institutions, opening up Pendle access to traditional financial clients.

3. PT Compliance of Islamic Funds

Similarly, Pendle will also create a ‘fortress’ that complies with Shariah principles. Islamic finance is a global market with a scale of $39 trillion, covering more than 80 countries. In the past decade, Shariah-compliant financial products have grown explosively at an annual rate of 10%.

New Project Boros

The Power to Subvert Reality

As builders who have experienced multiple cycles, we understand the industry’s laws well - the development of memes and protocols always goes hand in hand. But blockchain technology always reaches new heights in every cycle, and now is the perfect time to break through technological boundaries.

Pendle firmly believes that the most revolutionary blockchain applications should be able to solve real-world problems more efficiently than traditional finance, especially in markets with insufficient liquidity, low transparency, and closed ecosystems.

The Boros we envision is an application that uses blockchain technology to achieve functionalities beyond the reach of traditional finance.

Anchor Maximum Revenue Source

As the largest yield platform, we have witnessed the explosion of demand for yield trading. The yield market of Pendle V2 has shown tremendous growth potential, driven by the widespread demand for yield hedging and speculation in the market.

Boros is taking this vision to new heights. It can support any type of yield - whether it’s DeFi, CeFi, LIBOR rates in traditional financial markets, or mortgage rates - greatly expanding Pendle’s market coverage and reshaping the possibilities in the yield space.

Boros’s first target is the largest source of income in the cryptocurrency market - funding rate.

The daily average open position of perpetual contract market reaches $150 billion, with funding rates flowing every second in the never-sleeping market; the daily trading volume is $200 billion, which is 10 times that of the spot market. The profit potential here is enough to surpass the current spot market of V2.

Through Boros, Ethena can achieve absolute control and predictive ability over the financial returns, lock in a fixed funding rate, and ensure the stability of large-scale operations.

Boros achieves interest rate trading by swapping the floating income stream of underlying assets with fixed income stream (and vice versa) until maturity.

Another typical case is the TRUMP contract listed on the perpetual DEX - long position holders need to pay a funding rate of up to 20,000% APY, which significantly erodes short-term profits. Boros provides a new solution: TRUMP/USDT perpetual traders can use hedging to convert floating funding rates into fixed payments.

On the contrary, traders who implement the current loan arbitrage strategy can also lock in high-yield opportunities and obtain fixed returns.

Boros sets a new standard for funding rate interaction by providing powerful yield control and optimization tools.

How does PENDLE fit into this vision?

Where there is yield, there is Pendle.

With the expansion of the ecosystem, the value created by the protocol through the three pillars of V2, ‘Fortress’, and Boros will be reflected in the flow of income to vePENDLE.

In 2024, active vePENDLE holders are the biggest beneficiaries of Pendle’s growth, with an average annualized return of about 40%, not including the $6.1 million airdrop value distributed in December.

Ultimate Vision

Pendle’s original vision was clear: to become a top yield trading protocol. This goal remains unchanged to this day, but our mission has evolved in sync with the growth of our business.

Whether you are a native crypto enthusiast or a Middle Eastern sovereign fund, Pendle will serve as the gateway for various income interactions. From DeFi to CeFi, we provide protocols, interfaces, and tools to empower a complete income journey.

The 2025 roadmap includes bold innovations, with ‘Fortress’ and Boros being two new vertical fields. We are well aware that not all plans can be executed perfectly. When faced with obstacles, we will adjust strategies, reevaluate, and forge new paths, just as we have done in recent years.

The market in 2025 will definitely be noisy and tumultuous, filled with disruptions and panic. At that time, we will anchor our mission: to expand V2, promote PT distribution to new heights, and unleash the potential of Boros. Instead of competing in others’ race, it is better to focus on established goals and move forward with determination.

Looking ahead and overcoming current challenges, we firmly believe that Pendle is steadily moving towards the goal of “Unified Yield Layer”.

Job is not done—but it will be.

TN

Pendle CEO and Co-founder