Observations and personal views from Nothing Research Partner BonnaZhu, the following content does not constitute any investment advice.

So how does Penpie make a profit?

How is this portion of profit distributed?

Mainly from three parts:

  1. LP earnings siphoning

    Penpie is similar to Convex, taking a portion of the Pendle rewards given to LP Boost as protocol income. Specifically, the Pendle rewards from Boost,

    - 5% goes to Penpie as platform operating fees
    - 12% goes to mPENDLE holders
    - 5% goes to locked PNP users (vlPNP)

    Note: Many people ask me about the difference between doing LP and buying PT. Essentially, doing LP and buying PT are somewhat similar, both being financial behaviors under the premise of capital preservation, rather than speculative trading like buying YT. However, the sources of earnings are different:

    - LP mainly earns from the Pendle token incentives of the pool
    - PT mainly earns from the interest yield that can be locked in at the time of purchase

    If Pendle incentives diminish or competition for liquidity intensifies, LP earnings will decline, but doing LP through Penpie can provide a significant safety cushion, allowing one to benefit from the Boost portion. While the earnings from PT often get diluted by funds, the yield is locked in upon purchase.

  2. Siphoning of vePENDLE earnings

    Penpie controls a large amount of vePENDLE, and the earnings from vePENDLE mainly come from two parts: 1) 3% commission from asset earnings after YT expires; 2) 80% of the pool fees obtained through voting weekly. After receiving the vePENDLE earnings, Penpie will redistribute them proportionally:

    - 40% to PNP locked users (vlPNP)
    - 40% to mPENDLE holders
    - The remaining portion is used to compensate victims of early hacker incidents

  3. Bribe income

    If project parties wish to seek voting support from vePENDLE held by Penpie, they can conduct bribery through the Penpie platform. The distribution of this income:

    - 95% to locked PNP users (vlPNP)
    - 5% as platform operating fees

    ⭐ Value capture of PNP

    However, it should be noted that although mPENDLE can also obtain a portion of the vePENDLE revenue, the platform usually prioritizes using the mPENDLE-related earnings to repurchase mPENDLE to maintain its price peg. The repurchased mPENDLE enters the Penpie treasury, and essentially still belongs to the PNP community assets.

    So to some extent, the value of PNP is tied to four main lines:

    - Platform TVL (corresponding to LP earnings)
    - vePENDLE scale (corresponding to YT commissions + pool fees)
    - Bribe activity (corresponding to voting incentives paid by project parties)
    - mPENDLE held by the treasury (corresponding to PENDLE value)

    The revenue structure is much richer than it appears on the surface.
    And if we look at them together, according to Dune data
    https://dune.com/beacon_early/penpie…

    In the past year, the vePENDLE controlled by Penpie generated approximately $5.45 million in fee income, of which 40% (about $2.18 million) belongs to locked PNP users; during the same period, the bribe received by Penpie was about $1.2 million, of which 95% (about $1.14 million) belongs to PNP users. Although LP Boost revenue siphoning data has not been compiled, it can be estimated based on Penpie's average $100 million TVL, a 10% APY Boost, and a 5% siphoning ratio: it can roughly contribute about $500,000 in annual income.

    When these three parts are added together, in the past year,
    PNP actually gainednearly $4 millionin economic benefits.
    Currently, Penpie's FDV is approximately$19 million,
    corresponding to a static P/E estimate,less than 5 times.

    In addition, the mPENDLE held by the Penpie treasury,
    corresponds to an underlying locked PENDLE amount of about 1.4 million.
    Based on the current mPENDLE discount level,
    its market value is also over $2 million;
    If Penpie liquidates, the future complete unlocking
    could reach nearly $5 million in potential value.
    https://shorturl.at/PYYVB

    🤖 In conclusion

    Writing this note is not to promote a token, but to say that when delving into the data, it is clear that there are indeed some cleverly structured businesses in the market that can continuously generate stable cash flow, but are often overlooked by the market due to a lack of liquidity narrative or other reasons.

    Theoretically, the upper limit of Pendle's value,
    will also drive the upper limit of Penpie's value upwards in sync,
    just like Curve Finance drives Convex Finance.

    The perception of Penpie among Pendle users is actually underestimated.

    From the actual trend,
    although the prices of PNP and PENDLE are not completely synchronized,
    the correlation between the two
    is definitely gradually strengthening.