Pendle Finance has emerged as a leading protocol in the rapidly evolving yield and liquid staking derivatives (LSDFi) space. By enabling users to separate yield-bearing tokens into principal and yield components—Principal Tokens (PTs) and Yield Tokens (YT)—Pendle offers a powerful toolkit for sophisticated yield management. However, recent developments have sparked concern: Pendle’s Total Value Locked (TVL) has plummeted from nearly $7 billion to around $3.4 billion, while the PENDLE token price has dropped by over 40%. This article dives into the root causes behind this downturn, analyzes key on-chain trends, and explores what the future may hold for Pendle and its native token.
Pendle’s TVL Collapse: A Timeline
According to DefiLlama data, Pendle reached an all-time high TVL of approximately $6.7 billion on June 10, 2025**. Within just two weeks, over **$3 billion in assets were withdrawn, marking a 40% decline. This wasn’t due to a security breach or protocol failure, but rather a confluence of market dynamics, product cycles, and investor behavior.
The primary driver? Massive withdrawals from liquidity re-staking tokens (LRTs) such as weETH (from ether.fi), sUSDE (from Ethena), ezETH (from Zircuit), and assets from Renzo and Swell. These protocols saw their own TVL peaks in June before beginning a steady decline—mirroring Pendle’s trajectory.
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Why Did Major Assets Exit Pendle?
Several interrelated factors explain the exodus:
1. Product Maturity and Expiry Cycles
Pendle operates with time-bound yield markets. On June 27, 2025, a significant number of PT/YT pools matured, especially those tied to early LRT positions. When these instruments expire, users must withdraw their principal or re-enter new positions. Many chose the former, locking in gains or reallocating capital elsewhere.
2. Diminished AirDrop Expectations
Protocols like ether.fi, Renzo, and Puffer initially attracted massive liquidity with anticipated token emissions. Now that some air drops—like ether.fi Season 2—are imminent or already distributed, speculative stakers are cashing out. The “farm-and-dump” strategy is common in DeFi, and Pendle’s integration with top LRTs made it a prime exit ramp.
3. Liquidity Pressures Across Re-Staking Platforms
As LRT platforms face challenges in maintaining sustainable yields and decentralized validator sets, investors grow cautious. Fearing illiquidity or de-peg risks (especially with synthetic assets like sUSDE), users are preemptively withdrawing funds—even from positions not yet mature.
Why Were Withdrawals So Premature?
Notably, many users pulled capital from pools scheduled to mature in July, August, or even September 2025. This early exit behavior signals deeper market unease.
Key Drivers Behind Early Withdrawals:
- Market Sentiment Volatility: Crypto markets are sentiment-driven. News of macroeconomic shifts, regulatory scrutiny, or protocol risks can trigger broad risk-off moves.
- Increased Liquidity Needs: Traders may require capital for new opportunities or margin calls elsewhere.
- Strategic Rebalancing: With rising uncertainty in restaking economics, investors are shifting toward safer or more diversified strategies.
The vePENDLE Unlock Effect
A critical but often overlooked factor is the vePENDLE token unlock schedule. Data from Dune Analytics shows a sharp spike in unlocks during June and July 2025.
Large token unlocks increase circulating supply, often leading to downward price pressure. When major stakeholders receive unlocked tokens, they may sell immediately to realize profits or hedge exposure—especially if market conditions appear fragile.
This dynamic likely contributed to the timing of the TVL drawdown and price drop, creating a feedback loop: more selling → lower confidence → more withdrawals.
Whale Activity and Market Psychology
On-chain analysis reveals dramatic shifts in PENDLE’s ownership structure.
A major whale address (0xb262F75dbBff55F14E2a50e2d9d751E213C81ED0) transferred over 1 million PENDLE tokens (~$3 million) to Binance on **July 8, 2025**. This wasn't an isolated event—since February, this wallet has offloaded PENDLE worth **$19 million**, with a peak sale of $11 million in April alone.
Such concentrated selling exerts strong psychological pressure on retail holders. When whales dump large volumes, it often triggers panic among smaller investors, accelerating price declines.
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PENDLE’s Price Plunge: Anatomy of a 44% Drop
From a high of $6.17 on June 23**, PENDLE fell to **$3.45 by July 8—a steep 44% correction. Three key forces drove this:
- Sustained Selling Pressure: Whale exits and unlock-related supply influx overwhelmed buy-side demand.
- Negative Market Sentiment: Fear of further declines led to reduced buying appetite and increased stop-loss triggers.
- Liquidity Fragmentation: As TVL dropped across integrated LRTs, Pendle’s yield attractiveness diminished temporarily, reducing incentive to hold or enter new positions.
Shifts in PENDLE’s Holder Distribution
Dune data highlights a dramatic shift in token distribution:
- On June 25, whales held 71.2% of circulating PENDLE.
- By June 28, that dropped to just 4.7%, while retail holdings surged from 27.1% to 92.4%.
This suggests a massive redistribution event—likely forced by whale selling and retail accumulation at lower prices.
Encouragingly, since June 30, whale holdings have begun to rise again. This could indicate strategic re-entry or bottom-fishing, offering a bullish signal for long-term investors.
Historical precedent shows that after extreme retail dominance and whale capitulation, assets often stabilize before entering new accumulation phases.
What Could Drive a PENDLE Recovery?
While short-term momentum remains weak, several catalysts could support a rebound:
- Completion of Whale Dumps: If major sellers have finished exiting, downward pressure may ease.
- Stabilization in Restaking Ecosystems: Improved yields and confidence in EigenLayer-aligned protocols (e.g., ether.fi, Renzo) could bring capital back to Pendle.
- New Product Launches: Pendle’s roadmap includes deeper integrations with layer-2s and novel yield strategies that may reignite interest.
- Market-Wide Risk-On Shift: A broader crypto rally could lift all boats, especially high-beta assets like PENDLE.
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Frequently Asked Questions (FAQ)
Q: Is Pendle protocol safe after the TVL drop?
A: Yes. The decline was due to economic and behavioral factors—not exploits or technical failures. The protocol remains secure and functional.
Q: Was the PENDLE price drop caused by a hack or exploit?
A: No evidence suggests any security breach. The sell-off aligns with token unlocks, whale activity, and LRT maturity cycles.
Q: Are whales still selling PENDLE?
A: While significant selling occurred in June–July 2025, recent data shows whales beginning to accumulate again—potentially signaling a bottom.
Q: Should I buy PENDLE now?
A: Short-term volatility remains high. Long-term investors may consider dollar-cost averaging, especially if restaking fundamentals strengthen.
Q: How does Pendle make money for token holders?
A: PENDLE holders benefit from protocol fees, boosted yields via vePENDLE locking, and potential buybacks or emissions from partner integrations.
Q: Will Pendle regain its $7B TVL?
A: Possible—if restaking adoption grows, new yield markets launch, and confidence returns. Past performance doesn’t guarantee future results, but Pendle’s innovation keeps it competitive.
Final Thoughts: Short-Term Pain, Long-Term Potential
In the short term, PENDLE lacks strong buying momentum. New buyers are scarce, and market sentiment remains fragile. Traders should avoid aggressive entries without clear reversal signals.
For long-term investors, however, this pullback presents a potential opportunity. Pendle’s core innovation—decoupling yield from principal—remains unmatched in DeFi. Its integration with top LRTs positions it at the heart of the restaking economy.
As the market digests recent unlocks and speculative capital rotates out, fundamentals will reassert themselves. Those who monitor on-chain shifts, holder behavior, and ecosystem developments may be well-positioned when the next accumulation phase begins.
Keywords: Pendle Finance, PENDLE price analysis, TVL drop, yield derivatives, re-staking protocols, vePENDLE unlock, DeFi liquidity withdrawal