Transition to sPendle
DeFi protocol Pendle is set to replace its existing vePendle governance token with sPendle, a liquid-staking token designed to encourage wider adoption through a more accessible 14-day withdrawal period, as opposed to multi-year lockups. This strategic shift aims to boost protocol revenue distribution to eligible sPENDLE holders.
The implementation of sPENDLE staking is scheduled to go live on January 20, with vePendle locks being paused on January 29. Concurrently, a new PENDLE incentive structure will be introduced on the same date. Stakers are advised to capture a snapshot of their vePendle balance and lock durations by January 29 for accurate virtual sPendle calculations.
The DeFi tokenization protocol has highlighted that this upgrade to its tokenomics is intended to overcome the inherent limitations of the vePendle system, thereby unlocking new avenues of opportunity for both the Pendle protocol and its PENDLE holders.
sPendle as the Primary Governance Token
Pendle has announced that sPendle, a liquid fee token, will supersede vePendle as the protocol's primary governance and reward token. Following this transition, new vePendle locks will be temporarily halted. sPendle holders are positioned to benefit significantly, receiving over 80% of the protocol's revenue through PENDLE buybacks and fee-distributed airdrops.
Internal analyses conducted by Pendle have identified significant obstacles that have historically hindered the broader adoption and effectiveness of the vePendle system. While vePendle locks were initially conceived to foster an efficient market and ecosystem, this objective has not been fully realized over the years.
A key limitation of vePendle is its non-transferability, which obstructs access to DeFi's crucial composability use case. Pendle posits that this restriction deprives holders of the potential to accumulate greater rewards. Furthermore, the weekly vote-to-earn program demanded a sophisticated understanding of DeFi and market dynamics for users to optimize their earnings. The protocol's existing voting mechanics also led to a concentration of rewards among a select group of vePendle holders possessing the expertise to navigate the system effectively.
Despite generating over $37 million in 2025, Pendle observed that the concentrated distribution model failed to adequately benefit the majority of its user base. This structure also served as a disincentive for casual users and newcomers to engage meaningfully within the ecosystem. The overall fee efficiency achieved has been attributed to disproportionate.
Improvements in Liquidity and Capital Efficiency with sPendle
Pendle emphasizes that sPendle offers a significant advantage with its instant redemption feature, available for a 5% fee. This makes sPendle a liquid, composable, and fungible token that can be seamlessly integrated with other decentralized applications (dApps) to continue generating rewards. Moreover, the token removes the inherent trade-off between liquidity and participation, irrespective of the lock period.
sPendle holders will be recognized as inactive but will still be eligible for yield distributions even if they do not vote during periods when a Pendle Protocol Proposal (PPP) is available. sPendle deployed within eligible DeFi integrations is considered active at all times. However, sPendle holders who fail to vote during an active PPP will forfeit rewards for a 14-day period.
Pendle asserts that this approach maintains flexibility and simplicity in user participation, ensuring that voting is only required for critical decision-making instances. The community is still expected to retain governance authority over essential protocol procedures in such scenarios. It is important to note, however, that sPendle holders with pending withdrawals will not accrue rewards or possess voting rights during their unstaking period.
Pendle has also clarified that the forthcoming algorithmic emissions model is designed to reduce overall emissions by approximately 30%, while simultaneously enhancing allocation efficiency across all pools. This upgrade will automate reward allocation based on data-driven Key Performance Indicators (KPIs), thereby contributing to Pendle's long-term capital efficiency and sustainability.
Conversely, Pendle acknowledges that certain aspects still require substantial enhancement. The special boost and virtual sPendle derived from existing vePendle will fully expire after two years. The boost multiplier, which commences at 4x, will linearly decay to 1x by the conclusion of the lock period.