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Pendle (PENDLE) token surges as traders leverage EigenLayer airdrop potential

Pendle, a protocol that allows users to trade future yield, has seen a surge in both its token price and its liquidity as traders flock to its platform to speculate on a possible EigenLayer airdrop.

EigenLayer is a new protocol that enables users to restake their staked Ether (ETH) and earn points that could be redeemed for future rewards. The protocol has not yet launched its own token, but many traders are anticipating that it will do so in the form of an airdrop to its early adopters.

To participate in EigenLayer, users need to deposit their ETH into Ether.Fi, a liquid staking protocol that issues eETH tokens in exchange. eETH represents a claim on the staked ETH and the rewards generated by EigenLayer.

However, holding eETH also means locking up one’s capital for an uncertain period of time, as the staked ETH cannot be withdrawn until the Ethereum 2.0 upgrade is complete. This is where Pendle comes in.

Pendle allows users to separate the ownership of eETH into two components: the underlying asset (eETH) and the future yield (eETH-y). Users can then sell their eETH-y tokens on Pendle’s secondary market and receive upfront cash, while retaining their eETH tokens and the potential EigenLayer airdrop.

By doing so, users can effectively leverage their exposure to the airdrop, as they can use the cash from selling eETH-y to buy more eETH and deposit them into EigenLayer. This strategy has attracted a lot of interest from traders, who have deposited over $129 million worth of eETH into Pendle since January 10, up from around $1 million.

The increased demand for eETH-y has also pushed up its implied annual percentage yield (APY) to 27.5%, much higher than the 4% APY offered by staking ETH alone. This means that buyers of eETH-y are willing to pay a premium for the future yield of eETH, which reflects their bullishness on EigenLayer’s prospects.

The growth in Pendle’s liquidity and trading volume has also boosted the value of its native token, PENDLE, which is used for governance and fee distribution. PENDLE has risen by 74% in the last month, reaching a high of $2.06 on 24, January 2024. The token has gained over 2,000% since its launch in May 2023.

PENDLE price chart 1 year | Source: Coingecko

Pendle’s co-founder, TJ Lee, said that the protocol is benefiting from the innovation and experimentation in the DeFi space, especially in the liquid staking and points systems sectors.

“We are very excited to see the adoption of Pendle by the DeFi community, especially by the EigenLayer users who are looking for a way to optimize their capital efficiency and exposure to the airdrop. Pendle is designed to be a flexible and composable protocol that can support any type of future yield, and we are always looking for new opportunities and partnerships to expand our offerings and use cases.” Lee said.

Pendle is not the only protocol that is tapping into the EigenLayer airdrop speculation. Other protocols, such as SushiSwap and Curve, have also launched eETH pools and incentivized them with their own tokens. However, Pendle stands out as the only protocol that allows users to trade their future yield and access liquidity without sacrificing their airdrop eligibility.

As the DeFi space continues to evolve and innovate, protocols like Pendle are likely to play a key role in providing users with new ways to manage their risks and returns, as well as to capture the value of emerging opportunities like the EigenLayer airdrop.

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