This observation and personal opinion come from BonnaZhu of Nothing Research Partner; the following content does not constitute any investment advice.
Recently, DWF Labs' stablecoin USDf has been launched on Pendle, providing LPs with high incentives, much higher than buying PT. However, since I don't have vePENDLE for yield enhancement, the direct LP returns are a bit of a loss.
So I started looking for third-party yield platforms, tried Penpie, and finally achieved nearly 40% APY, which is basically close to the 50% max APY limit.
The background of Penpie is also similar to that of Convex:
Under the vePENDLE model, the locking period is long, and liquidity is poor.
For ordinary users, yields have increased, but the cost is too high.
This has led to the emergence of intermediate layers like Penpie, which provide miners and project parties with a lower threshold to participate in Pendle war through 'platform delegated locking + liquidity tokens + governance outsourcing':
Platform delegated locking
The greatest value of platforms like Penpie is actually allowing miners to benefit from the yield enhancement brought by veTokens without needing to lock their own veTokens. Penpie will uniformly lock the PENDLE at the highest level for a two-year term into vePENDLE, which will be controlled by the protocol and shared among all miners on the platform.Liquidity tokens
So where does the platform's vePENDLE come from? It comes from another group of users who 'contribute' PENDLE for locking. Penpie will issue mPENDLE to locking users as a liquid version of vePENDLE.
As a result, mPENDLE can also obtain a portion of the protocol revenue from the Penpie platform (derived from the earnings deducted from miners' APY, set at 12%). Essentially, mPENDLE targets those who want to stake PENDLE tokens for economic benefits but are deterred by the lack of liquidity in veTokens.Governance outsourcing
However, for users who 'contribute' PENDLE for locking in Penpie, although they gain additional yield + withdrawable flexibility, they also forfeit their native voting rights. The voting rights of the vePENDLE locked in Penpie are actually exercised uniformly by the platform, and the direction of the vote is determined by the stakers of PNP (Penpie's governance token). If the project parties want to strive for more incentives on Pendle, they can choose to influence PNP community decisions through bribery.
Currently, the PENDLE controlled by Penpie basically accounts for about one-third of the vePENDLE volume, which has a huge impact. For PENDLE, Penpie, as its 'yield enhancement platform + governance rights secondary market,' is welcomed because it means greater long-term stability of locked PENDLE and lowers the threshold for many project parties to participate in the Pendle War.Core challenge
Of course, mPENDLE does have a certain discount to the spot PENDLE. After all, it represents the portion of vePENDLE that is locked and cannot be redeemed directly, only able to exit through trading. This discount essentially prices the loss of liquidity and is a structural feature like cvxCRV and other veToken wrappers. Historically, discounts have generally been over 50%.
Therefore, establishing deeper liquidity pools for liquidity tokens of veTokens,
Almost every veToken yield enhancement platform is a necessary path. Maintaining the liquidity of this part of the LP usually requires continuous incentive costs.
The advantage of Penpie compared to other platforms is that it is part of the Magpie's veSubDAO system and holds various governance token assets (such as CAKE, MGP), which can assist in liquidity construction for mPENDLE on different chains—like BSC. Currently, the TVL of the mPENDLE/PENDLE pool on PancakeSwap is approximately $1.8 million.
However, due to the recent upgrade of Pancakeswap's token economics, the veToken governance model is no longer used, which may indirectly affect Penpie's liquidity layout in the short term. However, as long as the veToken system continues to develop, the demand for this model will not disappear.
