Nexo, a leading regulated digital assets institution, has announced the listing of Pendle’s native token, PENDLE, on its platform. This strategic move comes as Pendle experiences a remarkable surge in Total Value Locked (TVL), which has increased by nearly 90% over the past month. PENDLE is an inflationary utility token specifically designed to enhance liquidity within the Pendle decentralized exchange.
.@pendle_fi’s $PENDLE is available on Nexo! Let’s explore. ⬇️$PENDLE serves as an inflationary utility token aimed at enhancing liquidity in the @pendle_fi decentralized exchange, designed to extract yield from productive assets, enabling yield trading and hedging activities.… pic.twitter.com/v9OvG1bbFS
— Nexo (@Nexo) April 12, 2024
The primary objective of PENDLE is to extract yield from productive assets, thereby facilitating yield trading and hedging activities for users. At the heart of Pendle’s operation is its unique mechanism of splitting an asset with an uncertain yield into two distinct components: a principal token (PT) and a yield token (YT).
The principal token functions similarly to a “zero-coupon bond” in traditional finance. It trades at a discount to the underlying asset due to the extracted yield component. On the other hand, the yield token is comparable to the interest payments received from a bond. This allows users to go long on the expected yield without holding the underlying asset.
Pendle’s Growth and Community Support
Pendle’s innovative approach to yield trading with uncertain outcomes has positioned it as a primary beneficiary of loyalty points programs from projects like ether.fi and Ethena Labs. This support from the community and strategic partnerships has contributed significantly to Pendle’s growth and increased its TVL. Beyond its utility as a yield-extracting token, PENDLE also serves as a governance token within the Pendle protocol.
When locked into vePENDLE, token holders are granted governance rights, enabling them to influence the allocation of emission directions. Moreover, vePENDLE holders accumulate a portion of the protocol’s trading fees. Additionally, vePENDLE is entitled to a 3% commission from the yield generated by the Yield Tokens (YT) on the platform. This dual role of PENDLE not only incentivizes long-term holding but also encourages active participation in the protocol’s governance.
The listing of Pendle’s PENDLE on Nexo marks a significant milestone for the Pendle ecosystem and the broader DeFi space. With its innovative approach to yield extraction and liquidity enhancement, Pendle has demonstrated strong growth potential. As PENDLE continues to gain traction and integrate with prominent platforms like Nexo, it is poised to further fuel its growth and expand its user base, solidifying its position as a key player in the DeFi landscape.