Quick Breakdown
- Pendle is replacing vePENDLE with sPENDLE to remove long lock-ups and complex governance.
- sPENDLE introduces liquidity, DeFi interoperability, and simplified voting requirements.
- Up to 80% of protocol revenue will fund token buybacks for governance rewards.
DeFi yield-trading protocol Pendle is set to phase out its vePENDLE governance token this month, replacing it with a new liquid staking and governance asset, sPENDLE, as part of a major tokenomics overhaul aimed at improving usability and adoption.
— Pendle (@pendle_fi) January 20, 2026
The protocol announced the changes on Monday via X, citing long lock-up periods, complex governance mechanics, and poor interoperability as major drawbacks of the vePENDLE system, despite Pendle’s strong growth and rising protocol revenue.
sPENDLE will become Pendle’s primary governance and fee-earning token, offering greater flexibility for holders and simpler participation in protocol decisions.
Why Pendle is moving away from vePENDLE
According to Pendle, vePENDLE’s rigid design created high barriers for everyday users. Token holders were required to lock their PENDLE for long periods, during which funds were inaccessible, limiting capital efficiency.
While the model was meant to encourage long-term alignment, Pendle admitted it failed to scale participation. Governance also proved too demanding, as users had to vote weekly to maximize rewards, a system that favoured only highly experienced DeFi users.
As a result, governance rewards became heavily concentrated, even though the protocol generated more than $37 million in revenue in 2025.
How sPENDLE changes governance and rewards
The new sPENDLE token introduces a liquid, transferable alternative with a 14-day withdrawal period. Users who want immediate liquidity can exit instantly by paying a 5% fee.
Governance is also being simplified. Instead of weekly votes, sPENDLE holders will only need to vote on major Pendle Protocol Proposals (PPP) to remain eligible for rewards. When no proposal is active, eligibility will continue automatically.
sPENDLE staking goes live on Tuesday, while new vePENDLE locks will be paused on January 29. A snapshot of existing vePENDLE balances will be taken to support the transition, with the new governance framework rolling out the same day.
According to DeFi Llama, Pendle currently ranks as the 13th-largest DeFi protocol by total value locked, holding nearly $3.5 billion in assets. In October 2025, Pendle Finance officially went live on Plasma Foundation, marking a significant step in bringing fixed yield opportunities to mainstream users through Plasma’s digital banking platform.
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