Increasing Pendle Finance and addressing the emergence of Notcoin

Prediction

The altcoin market gained momentum after the recent approval of Ether (ETH) exchange-traded funds (ETFs) in the United States. In May, the total altcoin market capitalization increased by about 20%, with ETH responsible for half of this growth.

Upcoming airdrops, which distribute billions of project tokens to decentralized finance (DeFi) users, have the potential to create more excitement in the altcoin market. Major weather events from projects with multi-billion valuations such as LayerZero, Etherfi, Blast and zkSync are expected by the end of Q2 2024.

Analysis

Growing enthusiasm around liquidation recovery benefited Pendle's finances in May. Pendle is an interest derivatives multichain protocol that allows users to separate yielding token assets into principal and yield classes.

PENDLE's value and total value locked (TVL) grew by 58.6% and 50.5% respectively, outperforming other large Defi projects. As of June 3, Pendle had a TVL of $6.28 billion. It now ranks as the sixth largest DeFi protocol, surpassing Uniswap's TVL of 6.12 billion.

Liquid Stock Tokens are currently the most heavily traded asset on Pendle and are the top five pools with the highest TVL. Etherfy's WETH pool alone has covered $1.4 billion in TVL.

Users can split yielding assets on Pendle, such as Renzo's ezETH, to generate a profit token (in this case YT ezETH) and a primary token (PT ezETH). The PT token represents the asset's principal, while YT is the right to future production.

Each PT and YT has a maturity date. PTs, which usually trade at a discount, can be redeemed for the original asset after this date. As for YT, they continue to generate income until the maturity date, after which YT is worthless. On top of this, YT ezETH holders are eligible to receive an airdrop allocation from the main asset.

PT holders, on the other hand, will not receive any airdropped tokens. Both YTs and PTs are tradable and liquid.

Airdrop farmers are encouraged to import their LRTs into Pendle after initiating protocols for liquid re-establishment of point multipliers. These multipliers increase airdrop allocations when an asset is held in the DeFi protocol, compared to when it is placed in a wallet.

For example, Renzo Protocol is currently offering a 4x multiplier on its Pendle Pool – on top of the already strong airdrop exposure from YT tokens. By buying YT Tokens, you can earn 117x the number of Rezo Weather Points than buying the original asset.

This process of maximizing future airdrop allocations is called leveraged point farming. The multiplier incentive aims to expand the utility and acceptance of LRT tokens in DeFi. All major LRT protocols include a score multiplier of 2x to 4.5x for Pendle. This multiplier applies to both liquid suppliers and YT containers.

It should be noted that Pendle's reliance on LRTs for its locked-in value means high single-risk exposure. Pendle's TVL saw $1-billion in inflows at the end of April. This 25% reduction in TVL was mainly due to air drop classification from Etherfi, Etena and Renzo.

Once the highly anticipated airdrop is distributed, the incentive to use the refactoring protocol is reduced and many users withdraw their funds. However, the aforementioned projects have already announced second seasons of their airdrops to maintain their TVL.

Another in the current market environment is NotCoin (NOT), a Telegram mini decentralized application (DApp) native to NotCoin created by Open Builders. From May 27 to June 3, it did not see a significant price increase of more than 400%.

Mini DApp is a lightweight application embedded in major social media platforms. NotCoin can be played within Telegram without downloading additional software, which significantly lowers the barrier to entry. Players can access in-game symbols by not only touching the screen.

With a simple monetization model and minimal DApp design, NotCoin attracted over 35 million users on May 16, with 6 million daily active users before the token's listing. Notcoin distributed 78% of NOT to users at launch, with the rest allocated to the strategic development of the Notcoin ecosystem.

This wide distribution prevents the community from maintaining memecoin as an open network environment. As of May 30, there are 1.6 million onchain note holders, more than other large-cap memecoins such as Shiba Inu (SHIB) (1.4 million), BONK (721,000) and Pepe (PEPE) (235,000).

Recent price increases remain speculative. This may be partly due to the arrival of more applications in the Ton ecosystem, which has increased the community's awareness of NOT. There is a collaboration between Notcoin and Catizen, a cat-raising game, which supports non-in-game purchases.

Katizen became the top rated app during Open League Season 3, developed by the Ton Foundation to encourage Ton users. With nearly 2 million daily active users, Katizen earned 50 million NotCoin in three days and burned 10% of it on May 22. Also, Notcoin burned 6.9 million not on May 30th.

This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.