DeFi Tokens Plunge 10%-20%, Led by Pendle Amid Weak Crypto Price Action This Week

Pendle has recently lost $3 billion of its TVL with the June expiry as a result of diminishing airdrop farming hype and lower yields amid muted crypto activity.

AccessTimeIconJul 3, 2024 at 3:48 p.m. UTC
Updated Jul 3, 2024 at 3:51 p.m. UTC
  • The governance token of Pendle declined 20% earlier this week amid steep roll-off in the value of assets locked on the platform.
  • AAVE, LDO also saw more than 10% price drops as a large investor moved $10 million of tokens to Binance.

Cryptocurrencies in the decentralized finance (DeFi) sector were hit harder than the broader crypto market this week, with the CoinDesk DeFi Index losing 9% from its Monday high versus the CoinDesk 20 benchmark's 5% decline during the same time.

Leading the plunge was the governance token of Pendle – a DeFi protocol that offers crypto yields in the form of tradable tokens – falling more than 20% during the Tuesday and Wednesday trading sessions, with short positions piling up to bet on further declines.

The protocol saw a significant, $3 billion drop in the value of assets locked on the protocol (TVL), Defillama data shows. Analysts reasoned that many users withdrew funds from the protocol instead of rolling over their positions at the end of June lock-up expiry. Pendle also benefited from the airdrop and points farming bonanza earlier this year, which ground to halt lately.

"Yields aren't very good for future pools at the moment so people withdrew versus rolling [over]," Rob Hadick, general partner at venture capital firm Dragonfly said.

"While there will be TVL noise in the short run due to specific points programs lapsing, we're hearing excitement around upcoming tie-ups, including the Symbiotic-Ethena-Mellow partnership, which should attract fresh inflows," Joshua Lim, co-founder of principal trader Arbelos Markets, told CoinDesk in an interview.

Tokens of other major DeFi lending platforms Aave (AAVE) and liquid staking protocol Lido (LDO) were also among the biggest underperformers, falling 10%-15% during the same period.

The declines happened as a large crypto investor, or "whale," transferred earlier Wednesday $6.2 million worth of LDO and $4.5 million in AAVE to crypto exchange Binance, likely to sell the tokens, one observer noted citing blockchain data on EtherScan.

The DeFi sector's struggle coincided with a period of lull in the crypto market, with bitcoin (BTC) and DeFi hotbed ether (ETH) consolidating range-bound below their March peaks. ETH, the second largest crypto asset, is down about 6% from its Monday highs and has erased most of its gains since odds for regulatory approval for U.S. spot ETFs jumped overnight in late May.

Edited by Stephen Alpher.


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Krisztian  Sandor

Krisztian Sandor is a reporter on the U.S. markets team focusing on stablecoins and institutional investment. He holds BTC and ETH.