The Pendle ecosystem welcomes new growth momentum, the Interest Rate swap sector development enters a new stage.

Pendle has recently achieved significant rise in both total locked value and token price, and its ecosystem's flywheel effect is about to kick off. As a token that adopts the ve-tokenomics model, Pendle currently lacks protocols like Convex to fully realize its potential. The Equilibria project has emerged to fill this gap. This article will analyze Equilibria's mechanisms and its potential impact on Pendle and the entire Interest Rate swap space.

vePendle holders enjoy multiple benefits, including voting on incentive distribution, enhancing PT/SY pool yields, receiving 3% of YT interest earnings, and 80% of AMM swap fees. These rights are comparable to the industry benchmark veCRV and hold considerable value.

However, the two-year maximum lock-up period has had some impact on the liquidity of vePendle. The operating model of Equilibria is similar to that of Convex, which helps enhance Pendle's AMM LP yields by permanently locking vePendle and distributing ePendle tokens to users. At the same time, Equilibria allocates part of the enhanced yields to ePendle and vlEQB holders, with vlEQB also enjoying additional incentive earnings.

Pendle's recent rise is mainly due to two factors: first, the mechanism updates brought by the V2 version; second, the emergence of sectors such as LSD (Liquid Staking Derivatives) and derivatives that can generate long-term returns, providing Pendle with a stable source of assets.

It is worth noting that Pendle has yet to develop its potential in terms of incentive mechanisms. Considering that professional institutions hold a significant share in LSD and have a strong demand for regular returns, theoretically, LSD protocols have the motivation to provide incentives on the Pendle platform to meet institutional needs.

Although Pendle has been operating for two years, only 30 million of the 150 million circulating supply is currently locked, which provides significant space for the early development of Equilibria. Equilibria plans to launch activities in May, airdropping 2% of the total EQB token supply based on the amount of Pendle users deposit, which is expected to attract a large amount of circulating Pendle to be locked. Additionally, with key members of the Pendle team participating in Equilibria's multi-signature management, a substantial amount of Pendle held by the team may also flow in, further increasing Pendle's overall locking ratio.

In addition, Pendle's tokenomics is designed to implement a 2% perpetual incentive inflation after the rapid inflation period ends in 2026, which means that vePendle/vlEQB holders have the opportunity to benefit from incentive yield in the long term.

Since ePendle and vlEQB are interest-generating assets themselves, they can theoretically combine with Pendle again to build their own YT/PT (Yield Token/Principal Token), achieving a fixed Intrerest Rate and better serving institutional clients, while further promoting the development of the Pendle ecosystem and realizing a flywheel rise in total locked value. Even after Equilibria opens this path, other ve-token wrapping protocols may also follow suit and integrate into the Pendle ecosystem, helping Pendle explore new market areas.

Overall, Equilibria, as the Convex role within the Pendle ecosystem, will further unlock Pendle's potential, driving it to achieve flywheel rise, thereby activating the entire Interest Rate swap ecosystem.