DeFi yield platform Pendle is phasing out its vePENDLE governance token in favor of sPENDLE, a new liquid staking token designed to address adoption barriers that plagued the previous system.
Pendle announced the transition via X on Monday, stating that sPENDLE will become the protocol’s primary governance and reward token. The new token features a 14-day withdrawal period and can be instantly redeemed for a 5% fee, offering significantly more flexibility than vePENDLE’s rigid lock-up structure.
sPENDLE staking went live on Tuesday, while vePENDLE locks will pause on January 29. A snapshot of user vePENDLE balances will be taken to facilitate the switchover, with the new governance structure fully rolling out the same day.
Pendle acknowledged that despite strong platform growth over recent years, vePENDLE created “significant barriers” that limited broader adoption. The primary issue was its long lock-up periods, which prevented users from accessing their funds until predetermined dates expired.
The protocol intended vePENDLE’s design to drive long-term commitment, but the strategy failed to achieve its objectives. sPENDLE’s flexible 14-day unwinding period, combined with the option for instant withdrawal at a 5% cost, directly addresses this constraint.
Non-transferability was another major limitation. vePENDLE couldn’t be utilized across other DeFi platforms, isolating its utility. sPENDLE will integrate with multiple DeFi protocols, enabling use cases such as restaking and expanding its practical applications.
Pendle’s governance structure under vePENDLE was overly complex, requiring active weekly engagement to earn rewards. The vote-to-earn system demanded deep understanding of DeFi and market dynamics to optimize returns.
Despite generating over $37 million in governance rewards during 2025, the intricate voting mechanics concentrated benefits among a small fraction of highly sophisticated vePENDLE holders. Most users lacked the expertise to navigate the system effectively.
The new sPENDLE governance model dramatically simplifies participation. Holders need only vote on “critical” Pendle Protocol Proposals (PPP) to remain eligible for governance rewards. When no critical proposals exist, they automatically maintain reward eligibility without additional action.
Under the revised structure, Pendle will conduct PENDLE token buybacks using up to 80% of protocol revenue, distributing these repurchased tokens as governance rewards. This approach directly ties holder compensation to platform financial performance.
According to DeFi Llama data, Pendle ranks as the thirteenth-largest DeFi platform by total value locked, currently holding approximately $3.5 billion in deposits. The tokenomics redesign aims to capitalize on this substantial user base while removing obstacles to participation.
The transition represents Pendle’s effort to modernize its incentive structure and attract users deterred by vePENDLE’s constraints. The protocol hopes to achieve the long-term commitment adoption it originally sought.
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