Pendle replaces vePENDLE with sPENDLE to boost adoption

DeFi protocol Pendle plans to replace vePendle with sPendle, a liquid-staking token that favors a 14-day withdrawal period rather than multi-year locks to drive adoption. Protocol revenue will be distributed to eligible sPENDLE holders, while vePENDLE holders will receive exclusive boosted sPENDLE of up to 4x based on the remaining lock period.

According to Pendle, sPENDLE staking will go live on January 20, while vePendle locks will be paused on January 29. The new PENDLE incentive structure will also come into effect on January 29. Stakers are requested to take a snapshot of their vePendle balance and lock durations for virtual sPendle calculation as of January 29. 

The tokenization DeFi protocol emphasized that the upgrade to its Pendle tokenomics aims to address limitations of the vePendle system. It will also unlock new opportunities both for the Pendle protocol and PENDLE holders. 

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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