Lede
Pendle, a decentralized finance (DeFi) yield platform, has announced it is set to replace its vePENDLE token as its primary governance and reward token. The protocol is introducing sPENDLE, a new liquid staking token designed to address existing limitations within its ecosystem. According to the protocol, sPENDLE will function as a liquid fee and governance token, featuring a standard 14-day withdrawal period for participants.
The transition to the new token system is scheduled to begin this week, with sPENDLE staking going live on Tuesday. Following this initial launch, the protocol will pause vePENDLE locks on Jan. 29. To facilitate the switchover, a snapshot will be taken of user vePENDLE balances on that date, ensuring a coordinated move to the new structure. This evolution in tokenomics is intended to replace the previous system with a more flexible liquid staking model that aligns with broader market standards for capital efficiency and user accessibility.
Context
Pendle currently holds a significant position in the decentralized finance landscape, ranking as the thirteenth-largest DeFi platform in terms of total value locked (TVL). Data indicates that the protocol’s TVL sits at almost $3.5 billion. Despite this substantial growth, the platform’s team noted that the previous vePENDLE model ultimately caused significant barriers that limited broader adoption of the protocol. These barriers were primarily linked to the long-term lock-up periods required for the legacy asset, which prevented users from accessing their funds flexibly.
To solve these liquidity constraints, the new sPENDLE token is designed to be locked up and withdrawn at any time following a 14-day unwinding period. Additionally, the protocol offers an option for users to withdraw their assets instantly if they are willing to pay a 5% fee. This shift represents a departure from the original design, which was intended to drive long-term commitment but often resulted in capital being trapped in a way that discouraged new participants from joining the ecosystem. By introducing these liquidity options, Pendle aims to balance protocol stability with the practical needs of its user base.
Impact
The protocol is introducing a new governance structure that aims to make participation much easier for holders. Historically, Pendle’s weekly vote-to-earn system required a deep understanding of DeFi and market dynamics to optimize rewards, which often resulted in rewards being concentrated among a small fraction of expert users. Despite generating over $37M in 2025, the complexity of these mechanics acted as a deterrent for the general user base. The new model simplifies this by requiring holders to vote only on critical Pendle Protocol Proposals (PPP) to remain eligible for governance rewards.
Furthermore, the protocol is overhauling its reward distribution mechanism. Pendle will now conduct PENDLE token buybacks using up to 80% of protocol revenue. These tokens will then be distributed as governance rewards to eligible sPENDLE holders. In instances where there are no critical proposals to vote on, participants will automatically remain eligible for these rewards, effectively removing the burden of constant manual engagement. This change is expected to democratize access to protocol earnings and ensure that a larger portion of the community can benefit from the platform’s revenue generation without needing specialized technical knowledge.
Outlook
As part of its next evolution in tokenomics, Pendle intends for sPENDLE to be integrated with a number of DeFi platforms. This stands in contrast to the previous vePENDLE asset, which was non-transferable and lacked the interoperability needed to function across the wider decentralized finance ecosystem. By making the governance token liquid and transferable, Pendle expects to enable new use cases for the asset, such as restaking on other platforms. This integration strategy is a key component of the protocol’s plan to unlock new opportunities for PENDLE holders.
The full rollout of the new governance structure is set to occur on Jan. 29, coinciding with the pause of the legacy locking system. By removing the technical and liquidity-based hurdles that characterized the vePENDLE era, the protocol aims to sustain its growth as a top-tier DeFi platform. The focus remains on providing a more streamlined and liquid experience that caters to both retail and institutional participants. As the protocol moves forward with its $3.5 billion in total value locked, the success of sPENDLE will be measured by its ability to foster a more active and inclusive governance community.
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