Pendle Introduces New Liquidity Pools on Arbitrum to Reverse 40% TVL Drop

Pendle, a yield trading protocol, is working to turn around a big 40% fall in its total value locked (TVL) by setting up new liquidity pools on the Arbitrum network.

Pendle has set up new liquidity pools on the Arbitrum network to attract LPs who hold UNI, LINK, ETH, WBTC, CRV, CVX, USDT, or USDC. These pools will allow LPs to contribute liquidity and earn rewards within the Pendle ecosystem.

Pendle has also teamed up with Karak Network, a restaking protocol, to allow users to put Pendle’s Principal Tokens (PT) on Karak’s platform to earn Karak points (XP).

This collaboration will provide additional incentives for users to participate actively and maximize their rewards. Pendle tweeted, “Earn additional rewards on top of Karak XP with your PT-weETH, PT-rsETH, and PT-ezETH.”

Pendle CEO TN Lee highlighted the importance of collaboration with other protocols to recover from the TVL drop. “We’ve been talking to protocols, and some have provided higher multipliers,” Lee stated. For instance, EtherFi has given a 4x multiplier, and Pendle’s pools on Arbitrum also reward LPs with ARB tokens.

The TVL decline, which saw a drop from $6.2 billion to $3.7 billion, was triggered by the maturation of several large liquid restaking markets on June 27. Meanwhile, the protocol's native PENDLE token experienced a 50% decline before partially recovering amid the ongoing crypto rally.

Pendle's core function centers on Liquid Restaking Tokens (LRTs). These LRTs are further divided into two components: Principal Tokens (PTs) and Yield Tokens (YTs).

Yield Tokens (YTs), the other half of Pendle’s LRT equation, shine as tradable tokens representing the rewards users accrue on their staked assets. This allows YTs to be bought and sold independently, separate from the underlying staked tokens.

Pendle saw a surge in activity just before EigenLayer's much-awaited token generation event (TGE), showcasing the potential for YTs to capture pre-launch excitement.

Users sought to maximize their EIGEN airdrop allocations. However, the maturity of these LRT pools, launched earlier this year, led to approximately $4 billion leaving the protocol.

Crypto analyst and influencer 2Lambroz.eth highlights Karak’s support for EtherFi assets. Specifically, Karak supports two types of EtherFi assets: eETH(Karak) and weETHk.

The former refers to EtherFi’s LRT directly wrapped and deposited into Karak, while the latter represents a mix of different LRTs and LSTs deposited through EtherFi. Both asset types yield points from EtherFi, but weETHk offers users twice as many points from Karak, along with additional VEDA points.