Equilibria will help Pendle achieve a flywheel effect and unlock the potential of Intrerest Rate swaps.

Pendle has recently achieved a tenfold rise in TVL and coin price, and its flywheel effect is about to be initiated. As a token that adopts the ve-tokenomics model, Pendle currently lacks a project similar to Convex to fully realize its potential. Equilibria has emerged to fill this gap. This article will explore the mechanisms of Equilibria and its impact on Pendle and the Interest Rate swap field.

vePendle holders can enjoy multiple benefits:

1. Participate in the incentive distribution voting
2. Increase PT/SY mining pool revenue
3. Earn a 3% YT Intrerest Rate yield
4. Share 80% of AMM transaction fees

These rights are no less impressive than the current benchmark veCRV, and their value is quite considerable.

However, the two-year maximum lock-up period has posed challenges for its liquidity. Equilibria operates similarly to Convex, permanently locking vePendle and providing users with ePendle tokens to help enhance Pendle's AMM LP yields. Then, a portion of the boosted yields is distributed to ePendle and vlEQB holders, while vlEQB holders will also receive additional earnings.

Pendle's recent rise is mainly attributed to two factors: the mechanism updates brought by the V2 version, and the emergence of sectors such as LSD and derivatives that can generate long-term yields, providing Pendle with a stable source of assets.

However, the potential of Pendle in terms of Bribe has not been fully explored. Professional institutions hold a significant share in LSD, which have a strong demand for regular returns. Therefore, LSD protocols theoretically also have the space to conduct bribe on the Pendle platform to meet these institutional needs.

Although Pendle has been operating for two years, currently only 30 million out of 150 million circulating Pendle are locked, which provides some space for the initial growth of Equilibria.

Equilibria recently announced that it will launch an event in May, airdropping 2% of the total $EQB Token based on the amount of Pendle users deposit. This could lock a significant amount of Pendle that is still in circulation. Additionally, since a core member of the Pendle team is also one of the multi-signature managers of Equilibria, it is expected that a considerable portion of the Pendle held by the team will also flow in, further increasing the overall locking ratio of Pendle.

In addition, Pendle's Token economics is planned to implement a 2% perpetual incentive inflation after the rapid inflation period ends in 2026. This means that vePendle/vlEQB holders will have the opportunity to continuously benefit from additional earnings.

Since ePendle and vlEQB are also interest-bearing assets, theoretically they can be combined with Pendle again to build their own YT/PT, achieving a fixed interest rate and better serving institutional users, while further promoting the development of the Pendle ecosystem and achieving a flywheel rise of TVL. Even after Equilibria opens this path, other ve-token wrapping projects may also learn from and connect to the Pendle ecosystem, helping Pendle expand into new markets.

In summary, Equilibria can be seen as the Convex of Pendle. Its emergence will further unleash Pendle's potential, helping it achieve flywheel growth and energizing the ecosystem of interest rate swaps.