Pendle - EigenLayer airdrop trading platform?

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While it has been live for quite some time, Pendle began gaining adoption as a a “yield trading” platform in early 2023 with the burgeoning LSD sector. By splitting assets into their principal and yield components, Pendle allows for the tokenisation and trading of yield. Pendle allows users to purchase assets at a discount (akin to zero coupon bonds) to generate a fixed yield and speculate on the yield of some yield generating asset (akin to interest rate swaps) through their Principal and Yield tokens.

Since then as the surface area of yield-bearing tokens has expanded with yield-bearing dollars and more recently, Liquid Restaking Tokens (LRTs) - Pendle has been able to continually iterate and support yield trading for these primitives as they have emerged. The Pendle LRT markets have been particularly successful as they essentially allow users to pre-sell or leverage long airdrop opportunities (including EigenLayer). These markets have quickly become the largest markets on Pendle by quite some margin:

The success of this product, fuelled by EigenLayer hype, has fed into positive price momentum for the $PENDLE token into and through year end:

Through a custom integration of LRTs, Pendle allow the Principal Token to lock in the underlying staked ETH yield, EigenLayer airdrop and any airdrop associated to the Restaking Protocol which issues the LRT. This has created yields north of 30% p.a for PT buyers:

On the flipside, the Yield Token allows for a form of “leveraged point farming”, again due to the way LRTs are integrated into Pendle. Through the swap function within Pendle we are able to swap 1eETH for 9.6 YT eETH which will accrue EigenLayer and Ether.fi points as though one was holding 9.6 eETH:

In fact, for eETH, YT buyers also get a 2x multiplier on Ether.fi points, it is truly “leveraged airdrop farming”:

Given that the YT will converge to zero as maturity approaches, the YT buyer is betting that the value of the EigenLayer and Ether.fi (or Kelp in the case of rsETH) airdrops will be greater than the ETH spent on buying the YT.

Given the large expected size of the EigenLayer airdrop and the high demand to farm said airdrop, it is no surprise that these LRT markets have gained the most traction on Pendle. Locking in an airdrop in the form of ETH-denominated yield and leveraged yield farming both serve a very different market niche but it seems as though there is significant demand to do both. Pendle will likely continue to dominate this market segment as they introduce additional LRTs and as speculation surrounding AVS airdrops to LRT holders likely emerges later this year… In this sense $PENDLE provides nice index-wide exposure to the success of the LRT and EigenLayer vertical!

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