Pendle Launches sPENDLE: Transitioning from vePENDLE to Liquid Staking Model

Source: CryptoTale Original Title: Pendle Launches sPENDLE Staking Replacing vePENDLE Locks Model Original Link: Pendle has launched sPENDLE, a liquid staking token that will replace vePENDLE over time. The protocol introduced sPENDLE staking on January 20, shifting governance and rewards to a more liquid format.

The rollout targets long lockups and complex voting incentives. Pendle introduced sPENDLE with a 14-day withdrawal period and supports instant redemption for a 5% fee.

sPENDLE Staking Mechanism

sPENDLE becomes the protocol’s primary governance token and rewards asset. The transition will phase out vePENDLE as the platform’s main voting and incentive mechanism. New vePENDLE locks will not continue indefinitely under the plan. Pendle will pause vePENDLE locks on January 29, alongside a broader incentive changeover.

The protocol described the upgrade as a response to vePENDLE’s adoption limits. Internal analysis showed the system created barriers for many users. Long-term locking contributed to those barriers, reducing capital flexibility and discouraging participation.

vePENDLE’s non-transferable structure also limited DeFi composability and reduced ways to use positions across other dApps. Engagement stayed limited under that structure, with only about 20% of PENDLE supply actively engaged in vePENDLE participation.

Revenue Buybacks and Rewards Distribution

sPENDLE holders can exit with a 14-day withdrawal period, rather than multi-year locks. Alternatively, holders can choose faster liquidity through instant redemption at a 5% fee.

sPENDLE is fungible, transferable, and composable, allowing integration across DeFi applications while maintaining eligibility for distributions. The protocol plans to direct more than 80% of revenue toward PENDLE buybacks, which will fund distributions to eligible sPENDLE holders through airdrops and fee-funded distributions.

Eligibility rules will shift during withdrawals. Holders with queued withdrawals will not earn rewards or vote during the unstaking period. Holders remain eligible even if they do not vote, unless a live Pendle Protocol Proposal (PPP) requires action. If a PPP is active and a holder does not vote, the holder forfeits rewards for 14 days.

Algorithmic Emissions Model

Pendle will replace manual voting incentive distribution with an algorithmic emissions model targeting more efficient rewards allocation across pools. The model uses data-driven KPIs to route incentives, aiming for improved allocation efficiency and stronger capital discipline.

The redesign targets a reduction in overall token emissions by about 30% while improving incentive distribution efficiency. Existing vePENDLE holders will receive transition benefits, including a boosted sPENDLE of up to 4x based on remaining lock duration.

A snapshot on January 29 will record vePENDLE balances and lock periods for conversion calculations. The boost will decay linearly toward 1x and expire after two years.

Market Response

Market activity rose as the overhaul rolled out. PENDLE price traded around $2.07, up 9% in 24 hours, with spot volume up over 40% to $90 million and open interest up nearly 10% to $45 million.

sPENDLE staking begins January 20, while January 29 brings the vePENDLE lock pause, the snapshot, and the new incentive structure.