Pendle captures 30% of the YBS market, trades at P/E ~20, and is expanding into perp yield, BTCFi & TradFi. $100M+ revenue potential in view.
Key Takeaways
- Pendle enables fixed and variable yield trading via Principal Tokens (PTs) and Yield Tokens (YTs), creating structured markets around on-chain yield.
- Adoption has accelerated through integrations with yield-bearing stablecoins and ETH restaking, positioning Pendle as a core layer in DeFi’s fixed income stack.
- The protocol is increasingly used for treasury management.
- According to Citi, the stablecoin market is expected to grow at a 45% CAGR, creating long-term structural demand for Pendle’s infrastructure.
- Despite this backdrop, Pendle currently trades at a P/E of ~20, suggesting it remains undervalued relative to its growth potential. Circle trades at 80.
- Upcoming products like Boros and Citadel aim to expand Pendle’s reach into perp funding rates, and cross-ecosystem liquidity, providing new revenue streams and usage verticals.
Introduction: Stablecoin Expansion
Stablecoins are entering a new phase of significant adoption. Regulatory clarity is improving, especially with the passage of the GENIUS Act. Over the past twelve months, stablecoin trading volume was 20 times higher than PayPal’s and nearly 3 times that of Visa. Circle’s IPO was 25 times oversubscribed, with $CRCL jumping over 200% at its debut and now trading at a P/E ratio of 80. This reflects strong investor confidence in the future of stablecoins, with Citi projecting a 45% CAGR.
In this context, Pendle appears to be one of the best beta assets to gain exposure to this trend. Pendle currently captures 30% of the yield-bearing stablecoin market, with over 80% of its total value locked made up of stablecoin strategies.
By enabling anyone to lock in fixed yields on yield-bearing assets, Pendle brings a breakthrough innovation to DeFi. This gives users a powerful way to hedge against future yield volatility and manage risk, while also acting as an effective customer acquisition engine for its partners.
At the heart of Pendle’s model is yield tokenization, which splits any yield-generating asset into two distinct components: the Principal Token (PT) and the Yield Token (YT). This structure offers users new levels of flexibility. Those looking for predictable income can purchase PTs to secure fixed returns, while more speculative participants can trade YTs for leveraged exposure to yield performance.
In this thesis, we explore why Pendle is uniquely positioned to capture value from the rise of stablecoins. We also look at how upcoming initiatives like Boros and Citadel are set to expand Pendle’s addressable market and unlock new monetization opportunities.
At this point, $100 million in annualized revenue no longer feels out of reach, yet the market still appears to be overlooking this opportunity.
Pendle’s Path to PMF: From 2021 to 2024
Pendle’s journey began in 2021 with a bold and forward-thinking value proposition: the tokenization and trading of yield. While the concept was innovative, early adoption remained modest. Still, the team stayed focused and resilient, continuing to iterate and refine their vision.
By late 2022, after navigating several market narratives and with TVL still under $10 million, the team launched Pendle V2. This second iteration was a complete redesign, built from the ground up to improve capital efficiency, enhance composability across DeFi, and position the protocol for long-term adoption and growth.
Pendle’s Breakout: TVL, Trading Volume, and Protocol Usage
Pendle’s breakout moment came in early 2024. A surge of interest in points farming, driven by ETH restaking protocols like EtherFi, Renzo, and Kelp, sparked a wave of demand. In just six months, Pendle’s TVL soared from a few hundred million to over $7 billion.
After years of experimentation and chasing emerging narratives, it was the rise of points programs that finally delivered Pendle its long-awaited PMF and the recognition it long deserved.
Since then, the protocol has experienced rapid growth and 2024 has been nothing short of exceptional and firmly established that market demand for fixed yield products is both real and significant.
Key highlights for Pendle V2 since January 2024:
- $4.5 billion in TVL ($7 billion ATH TVL)
- $50 Billion in cumulative trading volume
- $35-40M annualized revenue
- 235+ pools listed – launching around 7 pools per week.
Yield-Bearing Stablecoins: Driving Pendle’s Growth
Following EigenLayer’s TGE, interest in points programs tied to ETH restaking declined significantly, prompting a shift in the composition of Pendle’s TVL which naturally transitioned toward a rising narrative: yield-bearing stablecoins.
This pivot proved to be a winning bet. As highlighted by Modular Capital and Spartan Group in their theses, the yield-bearing stablecoin market has grown explosively, from $1.5B to $11B in market capitalization since early 2024.
Pendle has emerged as one of the biggest beneficiaries of this trend. Of the $11B in yield-bearing stablecoins currently in circulation, 30% are currently deployed on Pendle, significantly contributing to its growing TVL.
Pendle as a Customer Acquisition Engine
We believe Pendle has reached a position of structural strength. No matter which narratives dominate next, the protocol is well positioned to continue attracting both existing and emerging yield-bearing assets.
Pendle is more than just a yield protocol. It’s a launchpad for growth and value discovery. When Pendle succeeds, the underlying assets benefit alongside it.
To illustrate this, here are several examples showcasing Pendle’s role as a liquidity driver across major DeFi protocols:
- Etherfi: Achieved a 15x increase in TVL within less than six months following its listing on Pendle.
- Ethena: Over 40% of its total TVL can be attributed to Pendle.
- Usual: Nearly 50% of its circulating supply is utilized in Pendle pools, with TVL growing over 180% since listing.
- LevelUSD: TVL remained flat before Pendle integration, then saw a 230% increase in supply following its listing.
Pendle and the TVL Lifecycle
Beyond being a growth accelerator, Pendle is evolving into a distribution hub across money markets. Pendle identified PTs as high-quality collateral assets and began integrating with other DeFi protocols. Today, Pendle PTs account for:
- 9.4% of Morpho’s TVL
- 7% of Silo’s TVL
- 6.6% of Euler’s TVL
- And, more recently, a governance proposal passed on Aave, enabling new markets for PT USDe, eUSDe and sUSDe. In the first two weeks, $1B has been deposited into these pools.
Being listed on Pendle initiates a flywheel effect: once a protocol reaches a few hundred million in TVL, it garners interest from money market curators (e.g., Morpho, Euler). As it scales into the billions, PTs can also get listed on Aave.
Pendle for Treasury Management
As Pendle continues to gain momentum, driven by record-breaking trading volumes and high-profile partnerships, an increasing number of DAOs, liquid funds, and other companies are adopting it as a core treasury management solution.
One example is DeFiance Capital, one of Asia’s leading liquid venture funds, which leverages Pendle to enhance stablecoin yields through strategies offering some of the most attractive risk/reward profiles in DeFi.
Looking ahead, the launch of Citadel is set to open the door for even more institutional and web2 adoption, providing compliant, streamlined access to Pendle’s innovative yield strategies for treasury management.
Pendle Business Model
As things stand, Pendle’s revenue model is primarily based on Pendle V2, with two main revenue drivers:
- A 5% take rate on the yield generated from assets sitting on Pendle. This take rate was increased from 3% to 5% in May.
- An average 5 bps take rate on trading volume, according to Modular Capital.
With an average of $4.3B in TVL year-to-date, earning an average yield of 8%, this results in approximately $17M in annualized revenue from yield fees, based on Modular Capital’s estimates.
In addition, with an average of $2.7B in trading volume YTD, this implies over $30B in annualized trading volume, which at a 5 bps take rate translates to around $16M in annualized revenue from trading.
This does not account for any revenue from airdrops. Overall, the $35M to $40M range in annualized revenue seems reasonable and implies a 90 to 100 bps monetization rate on TVL and a P/E ratio of around 16-20.
Over the last twelve months, the monetization rate was closer to 50 bps, but the recent increase in the take rate from 3% to 5% alone is expected to boost revenue by roughly 30%. This estimate also does not include potential future contributions from Boros or Citadel.
By the way, Pendle crossed a huge milestone last week with $1.42 billion in weekly trading volume, the highest ever since our inception.
What’s Next: Stablecoin TAM, BTCFi, Boros, and Citadel
Pendle has several strong catalysts lined up for 2025, including broader stablecoin adoption, renewed momentum in BTCFi, and the upcoming launches of Boros and Citadel. Let’s break each one down.
Stablecoin expansion
With the majority of its TVL composed of stablecoins, Pendle’s performance over the coming years will be closely tied to the growth of the stablecoin market.
This market is experiencing significant expansion. The total stablecoin supply recently reached an all-time high of $250 billion, and trading volumes have soared. Over the past twelve months, stablecoin transaction volume was 20 times greater than PayPal’s and nearly 3 times that of Visa.
Regulatory developments are also contributing to this momentum. Notably, the recently passed GENIUS Act in the U.S. Senate aims to establish a comprehensive framework for stablecoin-based payments and clearer oversight of issuers.
Pendle stands out as one of the key beneficiaries of this stablecoin-driven surge, particularly due to its strong exposure to yield-bearing stablecoins (YBS), a subcategory that now accounts for 80% of the protocol’s TVL.
Since January 2024, YBS adoption has accelerated dramatically, growing from $1.5 billion to $11 billion. Pendle has captured a significant share of this growth, currently holding 30% of the YBS market, with more than $3 billion, on its protocol.
The stablecoin market is expected to reach $500 billion in the next 18-24 months. If YBS make up 10% of that total (≃$50 billion), and Pendle manages to retain at least 15% share, it would represent a major growth opportunity for the protocol.
BTCFi (Bitcoin DeFi)
Bitcoin remains dominant in the crypto landscape, holding a 63% market share. It is increasingly viewed as a neutral and apolitical store of value, with adoption growing among individuals, institutions, and even nation-states.
However, out of the 19.8 million BTC in circulation, less than 1% is currently utilized in BTCFi. This emerging sector focuses on unlocking Bitcoin’s capital efficiency through use cases like lending and staking. In other words, most BTC remains idle in self-custody wallets.
Pendle has positioned itself early in this space. In 2024, 42% of all BTC restaked in BTCFi was deposited through Pendle. Since the end of BTC restaking airdrop campaigns in late 2024, BTCFi’s share of Pendle’s TVL has declined from 20% to around 5%.
Still, the long-term potential remains strong. Projects like Core Protocol, in partnership with Maple Finance, are developing new BTC yield products such as LstBTC. This liquid staked BTC will offer yield while remaining usable across DeFi. Given Maple’s close ties with Pendle, LstBTC is expected to be supported on the platform soon.
Even a small increase in BTCFi participation could drive significant TVL growth for Pendle in the near future.
Boros
Boros is Pendle’s next major product, built to tokenize and trade perpetual funding rate, the largest untapped source of yield in crypto. While Pendle V2 focused on passive yield (staking, LPs, restaking), Boros introduces active yield trading, unlocking a market estimated to be 10x larger than Pendle’s current scope.
Perpetual markets like Binance, Bybit, and Hyperliquid generate $200B+ in daily volume and $150B in open interest, with funding rates as a core yield mechanism. Boros enables:
- Protocols to hedge volatile funding rate exposure
- Traders to speculate on funding rate direction
- DeFi users to access a new dimension of yield
At its core, Boros applies Pendle’s signature model by separating and trading fixed vs. floating yield to funding rates, creating a new structured yield market around perps.
Beyond Funding Rates
While Boros is launching with a focus on perpetual funding rates, its broader design unlocks any type of variable yield for tokenization and trading. In the future, Boros could integrate:
- CeFi yield offerings, such as structured products from centralized exchanges
- TradFi yield instruments, such as tokenized T-bills or mortgage rates, or different types of loans
- Real-world assets (RWAs), including tokenized credit, real estate income streams, and private debt
This means Boros can evolve into the yield layer not only for DeFi, but for the broader tokenized finance ecosystem.
Citadel
Pendle has established itself as the leading platform for structured DeFi yields, supported by deep integrations, strong liquidity, and a consistent track record of innovation. But Pendle is more than just a product, it is foundational infrastructure for protocol-level growth and sustainable user adoption.
With the launch of Citadel, Pendle is now poised to scale its impact across non-EVM ecosystems, institutional-grade products, and compliance-driven markets. This is not just geographic or vertical expansion. It is the replication of a proven yield flywheel across new domains with vast untapped potential.
- Solana: Yield Tokenization in the Second-Largest DeFi Arena
With over $9B in TVL, Solana is the dominant non-EVM DeFi chain, yet fixed yield remains in its infancy, with only $95M currently captured by existing protocols like RateX.
Solana’s native primitives offer a strong foundation for fixed yield expansion:
- Liquid Staking: $8.45B TVL across Jito, Marinade, Sanctum, and CEX staking.
- Perpetuals: Yield-bearing LPs from Jupiter ($1.6B) and Drift ($1.08B).
- Lending: Kamino ($2.4B) offers composable, yield-generating collateral.
Pendle can serve as a PT wrapper and structured yield layer, unlocking access to a high-yield, under-served market within an active ecosystem in DeFi.
- TON Blockchain: Telegram-Powered Distribution
By embedding Citadel into the Telegram Mini App ecosystem, even a modest 5% user conversion could 10x the global DeFi user base. More than just a blockchain, TON is a distribution super-app, and Pendle’s fixed yield rails can offer intuitive, transparent access to crypto-native returns at retail scale.
- HyperEVM: Modular Interoperability Meets TVL-Rich Vaults
Pendle’s composable architecture fits seamlessly into HyperEVM’s modular stack, offering structured yield routing across ecosystems. As HyperEVM scales, Pendle is positioned to become its native fixed yield layer, bridging liquidity and capital efficiency across chains.
Total Addressable Market expanded
One of the most exciting aspects of Pendle is the size of its TAM. With the upcoming launch of Boros and Citadel, we’re looking at a TAM worth hundreds of trillions of dollars, an opportunity that Pendle will try to tap into over the coming years.
vePENDLE: Yield Boosts, Governance Power & Revenue Sharing
Pendle Utility
The Pendle token currently has no inherent utility on its own. However, once locked into the vePENDLE contract, it unlocks three key utilities:
- Boosted Yields for Liquidity Providers: vePENDLE holders who also provide liquidity on Pendle are eligible for boosted APYs, potentially up to 250%, depending on specific conditions.
- Governance over Incentive Distribution: As a vePENDLE holder, you gain the right to influence how incentives are allocated across Pendle liquidity pools. Each week, the Pendle protocol allocates a set budget of PENDLE tokens to be distributed as liquidity incentives. vePENDLE holders vote weekly to direct these incentives to the pools of their choice. The more vePENDLE you hold, the greater your voting power.
- Revenue Sharing through vePENDLE APY: vePENDLE holders are currently entitled to 100% of the protocol’s revenues implying a total of $36M distributed and an historical APR of 30%.
In addition to the above, a new rewards mechanism was introduced in February 2024. vePENDLE holders are eligible for monthly airdrops sourced from negotiated allocations secured by the Pendle team. In May alone, $2,4M was airdropped to holders.
The airdrop program isn’t ending in June after all. Instead, rewards will now continue on an ongoing basis, as long as Pendle earns points, vePENDLE holders get their cut.
- Snapshot: 20th of each month at 00:00 UTC
- Distribution: Pro-rata
- Sources: Points from YT fee deals.
Who Benefits from These Rewards ?
A closer look reveals that approximately 61 million PENDLE tokens, representing 38% of the 162 million circulating supply, are currently locked in the vePENDLE contract, with an average lock duration of 385 days. Supply locked is trending ATH for a while.
In an industry as volatile and high-risk as ours, this level of increasing long-term commitment sends a strong signal of confidence from a significant portion of investors in the future of the Pendle protocol.
Pendle Tokenomics
Currently, there are 162 million PENDLE tokens in circulation out of a total supply of 280 million. Of this total supply:
- 61 million tokens are locked for over a year in the vePENDLE contract,
- 57 million tokens are held in ecosystem-related wallets, including the Ecosystem Fund, Governance, and Team wallets.
All team and investor tokens fully vested in 2023, meaning the risk of a significant sell-off by early participants has been eliminated. Since the end of the vesting period, any increase in circulating supply has solely come from weekly liquidity incentives and ecosystem development programs but inflation will remain capped at 2% inflation a year.
Pendle Valuation: Stablecoin Capture, Revenue Projections & Multiples
In this section, we focus on Pendle’s valuation potential, particularly as the protocol stands to capture a meaningful share of the yield-bearing stablecoin market. Pendle acts as a powerful customer acquisition tool for stablecoin issuers, while its deep integrations and network effects create high entry barriers for potential competitors.
Before diving into the valuation itself, it is important to emphasize that this exercise is inherently subjective and based on analyst expectations. Numerous variables and assumptions are involved, and outcomes could turn out significantly better or worse than projected.
While a cash flow-based approach such as DCF would be ideal in theory, the long-term predictability of crypto markets remains limited. For this reason, we chose to adopt a more pragmatic 18 to 24-month horizon using market multiples. Specifically, we rely on a price-to-earnings (P/E) ratio to estimate Pendle’s potential valuation.
By the way, Modular Capital and The Spartan Group did an amazing job researching Pendle. You should definitely check out their work, as they provide more detail on specific areas. Our valuation methodology is fully aligned with theirs, though we have made a few personal adjustments.
Let’s get into it.
Forecasting Pendle’s Revenue
To forecast Pendle’s revenue, we first need to outline key assumptions. Citi expects the total stablecoin market to grow to $1,6 trillion by 2030 implying a 45% CAGR. Using this growth rate for the next two years brings us to an expected capitalization of around $500 billion for stablecoins, with yield-bearing stablecoins (YBS) capturing a 15% share. Today, the stablecoin market stands at approximately $250 billion, and YBS represent about 5%, or $11 billion. With the backdrop of supportive regulation, this segment is likely to expand significantly in the coming years. However, for the sake of conservatism, we will assume YBS will account for 10% of the stablecoin market in our model.
At present, Pendle captures around 30% of the YBS market, with over $3.5 billion in TVL attributed to YBS strategies, representing approximately 85% of Pendle’s total TVL. In our base case, we assume Pendle captures a more modest 15% of the YBS market, and that YBS will continue to represent 80% of Pendle’s overall TVL.
On monetization, Pendle has historically operated with a 50-60 bps monetization rate on its TVL. In our model, we assume a 100 bps monetization rate for three key reasons:
- Pendle recently increased its take rate from 3% to 5% on yield generated, a move expected by the team to boost revenue by 30%. This alone implies a revised monetization rate of approximately 78 bps.
- In a recent Bidclub podcast, TN indicated that Pendle could further optimize fees and potentially double monetization over time.
- Our estimate does not factor in the value of airdrops distributed to vePENDLE holders, adding another layer of conservatism to our model.
Overall, a 100 bps monetization rate appears reasonable and well-aligned with DeFi benchmarks.
Using a $500 billion stablecoin market cap and applying the assumptions above, we estimate Pendle’s TVL could reach approximately $9.3 billion. With a 1% monetization rate, this translates into $93 million in protocol revenue.
On top of that, we include expected revenue from Boros. According to TN, Pendle anticipates at least $2 million in annualized revenue from Boros during its first year. This brings our total base case revenue estimate for end-of-year 2026 to $97 million.
Let’s now explore what this implies for the valuation of the PENDLE token.
Valuation based on vePendle Earnings
What ultimately matters for valuation is the benefit accrued to token holders. In 2024, Pendle distributed 100% of its revenue to vePENDLE holders, resulting in an APY exceeding 40%. Going forward, Pendle plans to distribute 80% of its revenue to holders, retaining the remaining 20% to fund protocol operations. Given Pendle’s business model, the protocol is expected to operate at an 80% free cash flow margin.
Using 80% of projected revenue across all three scenarios, a P/E multiple of 25, and an expected circulating supply of approximately 170 million tokens, we arrive at a $PENDLE price of $11, for the base case.
The P/E multiple of 25 is, of course, a subjective input, as there is no established benchmark for web3 protocols of this kind. That said, for a high-growth, high-margin protocol like Pendle, this multiple appears conservative. As a point of reference, the average P/E ratio of the S&P 500 currently sits around 23 and Circle, which also relies on stablecoins growth, is trading at a P/E of 80 at the time of writing.
One variable that remains particularly difficult to forecast is the penetration rate of yield-bearing stablecoins within the overall stablecoin market. Our base case uses a 10% share, which we believe is conservative and achievable, especially given that the current share already stands at 5% and YBS is the fastest-growing segment. However, regulatory developments and market dynamics could impact this trajectory.
To reflect this uncertainty, we conducted a sensitivity analysis with a range of YBS penetration rates from 5% to 15%. This allows us to better capture the range of possible outcomes and define a more robust price range for $PENDLE.
Football Field Valuation
Using a sensitivity analysis based on YBS market penetration ranging from 5% to 15%, and keeping all other variables fixed, we arrive at three different price ranges for each scenario.
From there, we selected the range that remained most consistent across all outcomes, allowing us to highlight the most likely valuation regardless of how individual variables evolve.
This is why we chose a final $8 to $12 price range for $PENDLE implying 2-3x return. This model should be revisited and adjusted over time as the market develops.
Risks & Considerations
No investment thesis is complete without acknowledging the risks associated with the protocol. Pendle, while innovative and promising, is not without its vulnerabilities.
Smart Contract Risk
As with any DeFi protocol, smart contract risk remains one of the most significant threats. Pendle is particularly sensitive to this, given its position at the top of the value chain, it builds on top of several underlying protocols. If any of those base protocols suffer an exploit or malfunction, Pendle could be directly and negatively impacted.
That being said, Pendle has undergone 8 audits across the best security researchers & firms in the space.
Ethena Dependency
One key risk we believe is important to highlight is the level of interdependence between Pendle and Ethena. Both protocols are deeply interconnected, and to some extent, their success is mutually reliant.
As of today, approximately 60% of Pendle’s total TVL comes from Ethena’s usde. This concentration is significant and could introduce systemic risk in the event of a major depeg or smart contract vulnerability within the Ethena protocol.
That said, we consider this risk to be relatively low. Ethena has taken key lessons from past failures such as Celsius, and USDe has maintained its peg even during extreme market conditions, including the largest liquidation event in the history of the industry.
Moreover, while Ethena remains the largest contributor to Pendle’s stablecoin TVL, its dominance is gradually decreasing. This is due to faster growth from emerging stablecoin projects. In fact, over the past 12 months, the share of non-Ethena stablecoins in Pendle’s TVL has grown from 1% to 25%, reflecting a healthy trend toward diversification.
Competition
From this perspective, Pendle appears to benefit from significant entry barriers, making it very difficult for competing protocols to enter the space and capture market share. The protocol has already established deep synergies and strong network effects with other DeFi platforms, which further strengthens its competitive moat.
On top of that, the underlying infrastructure is complex and not easily replicated. Pendle has spent years educating the market on how its system works, along with the risks and opportunities it presents. This long-term investment in both technology and user understanding creates a meaningful advantage that would be hard for new entrants to overcome.
Stablecoin – YBS regulations
It’s clear that Pendle’s growth in this analysis is closely tied to the broader expansion of stablecoins, and more specifically, yield-bearing stablecoins. What matters most at this stage is the regulatory direction. While there is growing willingness to establish a clear framework for stablecoins, the nature of that framework will be critical.
If innovation is supported and regulatory clarity encourages growth, stablecoins could very well meet Citi’s expectations for adoption. Within that, the market penetration of yield-bearing stablecoins will be a key factor. Today, they represent around 5% of the total stablecoin market, with strong momentum expected to continue.
However, regulatory treatment such as the potential classification of these assets as securities and lack of regulation could reduce their attractiveness and slow adoption. This remains an important area to watch closely moving forward.
Final Thoughts
Pendle has evolved from a niche yield experiment into a core DeFi protocol, capturing over 30% of the yield-bearing stablecoin market and generating real, growing revenue. Its product design, ecosystem integrations, and user alignment through vePENDLE give it a strong foundation.
With stablecoin adoption accelerating and the launches of Boros and Citadel ahead, Pendle’s addressable market is expanding. A $100M annualized revenue target is increasingly within reach, with monetization nearing 100 bps on TVL.
Notably, Circle is trading at a P/E of 80, while Pendle trades below 20 despite both sharing similar growth catalysts tied to stablecoins. This highlights a valuation gap that may not be justified if Pendle continues to execute. Of course, this analysis is subjective. Outcomes could turn out better or worse depending on regulation, competition, and broader market dynamics. But based on current fundamentals and positioning, Pendle appears well placed to capture further upside.
