Key Changes in Pendle's Tokenomics
DeFi protocol Pendle is implementing a significant change to its governance structure this month, phasing out its vePENDLE governance token. This transition will introduce a new liquid staking token called sPENDLE, aiming to enhance flexibility and interoperability within the protocol.
Pendle announced the overhaul of its tokenomics on Monday, unveiling sPENDLE as the protocol's new primary governance asset. This new token is designed to offer improved functionality compared to the existing vePENDLE system.
Implementation Timeline and Details
The integration of sPENDLE is set to begin with staking going live on Tuesday. Following this, vePENDLE locks will be paused on January 29th. A snapshot of existing vePENDLE balances will be taken to facilitate the switchover process. The full rollout of the new governance structure under sPENDLE is scheduled for the same day.
Addressing Limitations of the vePENDLE System
The vePENDLE system imposed long lock-up periods, preventing users from accessing their funds until predetermined timeframes concluded. While this design aimed to foster long-term commitment to the protocol, it presented flexibility challenges.
In contrast, sPENDLE offers greater flexibility. Users can lock and withdraw sPENDLE at any time, subject to a 14-day unwinding period. For immediate access, a 5% fee can be paid.
Furthermore, the non-transferable nature of the vePENDLE token limited its utility across other DeFi platforms. sPENDLE aims to expand interoperability by being integrated with multiple DeFi platforms, allowing it to be utilized for purposes such as restaking and other blockchain applications.
Simplified Governance Participation and Rewards
The previous governance structure required active weekly engagement to earn rewards from governance contributions. This "vote-to-earn" system demanded a deep understanding of DeFi and market dynamics to optimize earnings, as noted by Pendle. The protocol generated over $37 million in 2025, with rewards primarily benefiting vePENDLE holders who were adept at navigating the system.
Pendle is introducing a simplified governance structure designed to make participation more accessible for holders. Under the new system, users will only need to vote on critical Pendle Protocol Proposals to remain eligible for governance rewards. If there are no proposals to vote on, eligibility will be maintained automatically.
To further incentivize participation and reward holders, Pendle will utilize up to 80% of its protocol revenue for $PENDLE token buybacks. These buybacks will then be distributed as governance rewards.
Pendle's Position in the DeFi Landscape
Pendle currently ranks as the 13th-largest DeFi platform based on its total value locked, which stands at nearly $3.5 billion. The protocol has demonstrated significant growth in its yield-trading operations over the past couple of years.