Pendle Tokenomics Upgrade: Three Main Reasons Why sPENDLE Replaces vePENDLE

On January 20, news broke that decentralized finance yield protocol Pendle announced a major adjustment to its governance token system, officially replacing the existing vePENDLE with a brand new liquid staking token sPENDLE. The core reason given by the team is that the old design limited broader user adoption in practical operation and no longer fits the current development stage of the protocol.

According to an announcement posted by Pendle on the X platform, sPENDLE will become the protocol’s new primary governance and fee distribution token, with a simultaneous overhaul of the governance mechanism. The team stated that this is an important evolution of the Pendle token economic model, aiming to maintain long-term incentives while significantly lowering participation barriers and enhancing token liquidity and composability.

In terms of mechanism design, sPENDLE supports staking and governance participation, with a default unbonding period of 14 days. Users can also choose to pay a 5% fee for instant withdrawal. Compared to vePENDLE’s long-term lock-up and non-transferable features, the new token offers a clear improvement in capital flexibility. The staking function for sPENDLE will go live this Tuesday, while additional locking for vePENDLE will be paused on January 29. At that time, the system will take a snapshot of existing vePENDLE balances to facilitate a smooth transition.

Pendle pointed out that the main issues with vePENDLE are excessively long lock-up periods, lack of interoperability, and complex governance processes. Since vePENDLE cannot be transferred, users are unable to use these assets in other DeFi protocols, limiting its potential in re-staking and other scenarios. sPENDLE plans to integrate with multiple DeFi platforms to become a more practical governance asset.

On the governance front, Pendle also simplified participation methods. In the future, users will no longer need to vote frequently every week; instead, they can express their stance in key Pendle Protocol Proposals (PPPs) to continuously earn governance rewards. If no PPP is active during a phase, the reward eligibility will be automatically retained. The official stated that this adjustment helps prevent governance rewards from being overly concentrated among a few high-frequency participants.

Data shows that Pendle generated over $37 million in protocol revenue in 2025. Under the new structure, Pendle plans to use up to 80% of protocol revenue for PENDLE token buybacks, with the repurchased tokens distributed as governance rewards to sPENDLE holders. According to DeFi Llama data, Pendle’s total value locked (TVL) currently approaches $3.5 billion, ranking among the top DeFi protocols worldwide.