Pendle Finance, a prominent decentralized finance (DeFi) protocol specializing in yield tokenization, has announced a significant overhaul of its governance token structure. The decision comes in response to persistently low adoption and engagement rates among its token holders, despite the protocol’s growing Total Value Locked (TVL).
In an official communication, the Pendle team acknowledged that the current governance token model, which often involves complex time-locking mechanisms to earn voting rights and boost yield, has created high barriers to entry. This complexity has deterred smaller participants and reduced the active pool of decentralized voters needed to steer protocol development.
The proposed revamp aims to introduce a more streamlined and flexible tokenomic structure, often referred to internally as ‘Pendle 2.0’ or similar iteration. Key changes are expected to focus on reducing the commitment required for participation, enhancing immediate staking rewards derived directly from protocol fees, and democratizing the voting process.
Experts suggest this move reflects a broader industry trend where earlier ‘ve-token’ models (vote-escrow models) are being re-evaluated. While ve-tokens successfully encouraged long-term commitment during the 2021 bull market, many protocols have found that the restrictive nature of these mechanisms stifles active governance and liquidity during periods of market volatility.
Pendle hopes that the simplified governance mechanics will boost the effective rate of staked tokens, increase decentralized decision-making power, and attract a wider user base looking for transparent and accessible yield opportunities. The transition plan and specific implementation dates are expected to be released in the coming weeks, subject to community feedback.
Source: DeFi protocol Pendle revamps governance token, citing low adoption
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