Mapping PENDLE’s roadmap toward $7 as TVL crosses $11.4B

Key Takeaways

Pendle witnessed a rapid growth in its Total Value Locked since April, and price action showed that a move to $7 was likely in the coming weeks.

Pendle [PENDLE] reached a significant milestone in the decentralized finance space.

The DeFi protocol reached a Total Value Locked (TVL) of $11.4 billion at press time, representing a nearly fourfold increase from its mid-April figures.

Back then, its TVL hovered around the $2.9 billion mark. The rapid TVL growth in recent months seemed to indicate heightened user adoption and the growth of Pendle as a key piece of DeFi infrastructure.

What’s behind Pendle’s TVL growth?

The Ethena-Pendle-Aave DeFi engine helps explain Pendle’s rapid TVL growth.

In traditional markets, advisors use different products from bond funds to structured notes that generate yield to recycle capital efficiently.

Such experiments have also taken place in the DeFi sector over the past six years. This particular engine sees Ethena [ENA] issue USDe, which generates yield to its stakers.

Pendle [PENDLE] takes this USDe and breaks it down to Principal Tokens (PTs) and Yield Tokens (YTs).

PTs represent the underlying value of USDe, while YTs represent the stream of yield from USDe. Pendle sells PTs at a discount and then redeemed one-to-one at maturity.

Aave [AAVE] completes the loop by allowing investors to borrow against PT deposits. Investors borrow an asset and recycle it to Ethena to mint USDe, which then flows into Pendle, reinforcing the loop.

The EVM-compatible nature of the three platforms makes integration easier. The expansion of Hyperliquid [HYPE] to this engine could allow capital to flow into perpetual Futures markets.

What’s ahead for PENDLE?

In a post on X, crypto analyst Ali Martinez reported that PENDLE was nearing the $4.4 support level. This level marked the lows of an ascending channel.

If the bulls defend it, a chance of a rally to the opposite end of the channel at $7 would become viable.