Pendle Ditches vePENDLE for sPENDLE: A Bold Move to Turbocharge Adoption
Pendle just ripped up its own rulebook. The yield-trading protocol is sunsetting its vePENDLE tokenomics model, replacing it with a new, streamlined sPENDLE system. This isn't a tweak—it's a full-scale overhaul designed to cut complexity and pull in a fresh wave of users.
From Voting Escrow to Simple Staking
Gone are the days of locking tokens for voting power. The new sPENDLE model shifts the focus to straightforward staking rewards. The goal? To dismantle the barriers that kept casual users at arm's length. By simplifying the process, Pendle bets that easier participation will directly translate to deeper liquidity and broader protocol use.
Liquidity Over Governance
The core mechanics pivot away from complex governance incentives. Instead, the revamped system directly rewards users for providing liquidity to Pendle's yield markets. It's a classic case of aligning incentives with action—fund the ecosystem, earn more of its token. A welcome change in a space often obsessed with governance theater that few actually engage with.
This strategic pivot signals a maturation. Pendle is moving beyond catering purely to DeFi degens and towards a model that could appeal to a more mainstream, yield-seeking audience. It's a calculated gamble that simplicity will win over sophistication. After all, in crypto, the most elegant model is often the one people actually use—not just the one that looks clever on a whitepaper. The move might just work, proving once again that in the race for adoption, sometimes you need to stop building a better mousetrap and just put out more cheese.
sPendle becomes protocol’s primary governance token
Pendle disclosed that the liquid fee sPendle will replace vePendle to become the protocol’s main governance and reward token. New vePendle locks will also be paused during this transition. Meanwhile, sPendle holders will receive over 80% of the protocol’s revenue through PENDLE buybacks and airdrops distributed from fees.
On the other hand, Pendle claims that internal analysis of vePendle has revealed major barriers limiting its broader adoption and effectiveness. vePendle locks were previously intended to lead to an efficient market and ecosystem, but this has not materialized over the years.
The non-transferrability of vePendle also prevents access to DeFi’s most powerful use case, composability. Pendle believes that this barrier robs holders of the opportunity to accumulate more rewards. The weekly vote-to-earn program also required users to have a deep understanding of DeFi and market dynamics to optimize rewards. The protocol’s voting mechanics also meant that rewards concentrated among a small percentage of vePendle holders with enough expertise to navigate the system effectively.
Pendle noted that despite generating over $37 million in 2025, the concentrated distribution model failed to benefit the large majority. It also discouraged casual users and newcomers from participating meaningfully in the ecosystem. The overall fee efficiency is attributable to disproportionate
sPendle improves liquidity and capital efficiency
Pendle emphasizes that sPendle offers instant redemption for a 5% fee, making it a liquid, composable, and fungible token that can be integrated with other dApps to continue earning rewards. Additionally, the token eliminates the trade-off between liquidity and participation regardless of the lock period.
sPendle holders will also be considered inactive but remain eligible for yield distributions even when they fail to vote during periods of an available Pendle Protocol Proposal (PPP). sPendle deployed in eligible DeFi integrations is considered active at all times. However, sPendle holders forfeit rewards for 14 days if they fail to vote during an active PPP.
Meanwhile, Pendle stresses that this approach keeps participation flexible and simple. It also ensures that voting is necessary only when critical decisions arise. The community is still expected to maintain governance authority over crucial protocol procedures in such instances. However, sPendle holders with queued withdrawals will not earn rewards or have voting rights during the unstaking period.
Pendle also clarified that the upcoming algorithmic emissions model aims to reduce overall emissions by roughly 30%. It will also significantly improve allocation efficiency across all pools. The upgrade will further allocate rewards automatically based on data-driven KPIs, making Pendle more capital-efficient and sustainable in the long run.
On the other hand, Pendle believes that there are areas that still need significant improvement. The special boost and virtual sPendle from existing vePendle will fully expire after two years. The boost multiplier starts at 4x and will decay linearly to 1x by the end of the lock period.
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