The decentralized finance (DeFi) yield protocol Pendle has launched a major overhaul of its tokenomics and governance system, replacing its vePENDLE token with a new liquid staking token called sPENDLE. The upgrade, announced on January 20, 2026, is designed to address critical limitations of the previous model that were seen as barriers to broader adoption.
The new sPENDLE model eliminates the multi-year lock-up periods required for vePENDLE, introducing instead a 14-day withdrawal period with an option for instant redemption for a 5% fee. This shift aims to improve capital efficiency and user accessibility. The manual weekly gauge voting system is also being replaced by an algorithmic emissions model, which Pendle states will reduce token emissions by approximately 30%.
A key component of the new structure involves using protocol revenue for PENDLE buybacks. Up to 80% of protocol revenue will be used to buy back PENDLE tokens, which will then be distributed as governance rewards to eligible sPENDLE holders. The governance process is simplified, requiring holders to vote only on critical Pendle Protocol Proposals (PPP) to remain eligible for rewards, rather than engaging in complex weekly voting.
The transition involves a snapshot of existing vePENDLE holder balances scheduled for January 29, 2026, after which new vePENDLE locks will be paused. Existing holders will receive a boosted sPENDLE balance of up to 4x, depending on their remaining lock duration. sPENDLE staking went live on January 21.
The protocol cited significant issues with the old vePENDLE system, including low participation, capital inefficiency, and a complex voting process that concentrated rewards among a small group of advanced users. Despite generating over $37 million in revenue in 2025, the previous mechanics limited broader user engagement.
Market activity reacted positively to the announcement. At the time of reporting, PENDLE's price was $2.07, marking a 9% increase over 24 hours. Trading volume rose 34% to $63 million, and open interest in derivatives climbed nearly 10% to $45 million, suggesting traders were opening new positions. The token's price action is currently consolidating below a key resistance level of $2.35, with technical analysis indicating a potential breakout could target the $2.60 area.
