A slow phasing out of the governance token vePENDLE will be initiated by Pendle this month, as the protocol replaces it with sPENDLE to offer a more flexible model intended to boost adoption.
The vePENDLE token is set to be replaced by decentralized finance yield platform Pendle as its primary governance and reward asset, with the argument being made that broader adoption was held back by the previous design.
In an announcement shared via X on Monday, sPENDLE was unveiled by Pendle as its new “liquid staking token,” which is set to replace vePENDLE as the primary governance asset on the protocol.
“We’re excited to introduce sPENDLE, the next evolution of Pendle tokenomics. This upgrade is designed to address critical limitations of the vePENDLE system, while unlocking new opportunities for PENDLE holders and the protocol,”
Pendle said.
A liquid fee and governance token featuring a 14-day withdrawal period is provided by sPENDLE, according to the team’s addition.
A Tuesday launch for sPENDLE staking is scheduled, while a pause on vePENDLE locks will be implemented on Jan. 29. A snapshot of user vePENDLE balances will then be taken by the team to aid with the switchover.
On the same day, a full rollout of the new governance structure under sPENDLE will be executed.
According to data provided by DeFi Llama, the 13th-largest decentralized finance (DeFi) platform in terms of total value locked is held by Pendle, with a valuation of nearly $3.5 billion.
Improved Tokenomics Could Benefit Pendle Users
In the post, it was stated by Pendle that despite strong platform growth over the past couple of years, “significant barriers” were ultimately caused by vePENDLE, which limited “broader adoption.”
One key factor was the long lock-up times for the asset, in which funds could not be retrieved by users until the set time periods were over.
It was stated by Pendle that the original design was intended to drive long-term commitment to the protocol, but its goal failed to be achieved. To address this, sPENDLE can be locked up and withdrawn at any time following a 14-day unwinding period, or an instant withdrawal can be executed for a 5% fee.
Other problems included the lack of interoperability of vePENDLE, as the asset was considered non-transferable, meaning that it couldn’t be utilized across other DeFi platforms.
To address this, sPENDLE will be integrated with a number of DeFi platforms, enabling the asset to be used for purposes such as restaking.
It was also stated by Pendle that the governance structure was too complicated for the majority of users, as active weekly engagement was required to earn rewards from governance contributions.
“The weekly vote-to-earn system required a deep understanding of DeFi and market dynamics to optimize rewards,”
Pendle said.
“Despite generating over $37M in 2025, the complex voting mechanics meant that rewards concentrated among vePENDLE holders with enough expertise to navigate the system effectively — a tiny fraction of users,”
Pendle added.
To resolve this, a new governance structure that makes participation much easier for holders is being introduced by Pendle. Instead of weekly engagement, votes for “critical” Pendle Protocol Proposals (PPP) will only need to be cast by holders to remain eligible for governance rewards.
When no PPP is available for voting, eligibility will automatically be maintained by participants.
Under this framework, PENDLE token buybacks will be conducted by the protocol using “up to 80% of protocol revenue” to be distributed as governance rewards.
