- Pendle partners with Ethena to add USDe, enabling a profitable yield looping strategy.
- USDe makes up nearly 60% of Pendle’s total value locked (TVL).
- Yields on Pendle’s Principal Tokens average 8.8%, higher than Aave borrowing costs.
Pendle is causing ripples within the decentralized finance (DeFi) sector following the formation of a high-profile agreement with Ethena, adding the fast-rising USDe stablecoin to its yield-generating ecosystem.
The agreement presents a profitable looping strategy by combining the revolutionary Principal Tokens (PTs) of Pendle with the lending marketplace of Aave, arguably laying the groundwork for PENDLE’s next major price action.
Earlier this week, Pendle confirmed USDe is live on HyperEVM. The release caused immediate buzz, with the initial liquidity pool being capped at a market size of $100 million.
Given USDe already accounts for nearly $4.01 billion, or nearly 60%, of Pendle’s total value locked (TVL), the integration constitutes a substantial expansion of the protocol.
Pendle’s yield system divides assets into two: Principal Token (PT) and Yield Token (YT). Under the new approach, a borrower can buy PTs with USDe to guarantee a fixed yield, and borrow USDC against those PTs on the Aave platform. The borrowed USDC is employed to buy additional USDe, with the cycle being followed again and again in a self-sustaining cycle.
With the PT yields on average being 8.8%, much higher than the borrowing rates of 4–6% on Aave, the approach has been extremely profitable. Both Aave earns 10% on the loan fees, with the token collecting a 5% fee on PT transfers, a double win for both protocols.
To mitigate liquidation risk, the Aave DAO anchors USDe’s value to the USDT price, providing further stability to borrowers. Profitability, however, remains reliant on PT yields remaining higher than borrowing costs.
The strategy could lose its effectiveness if the yields decline. Future expansion remains contingent on Aave uplifting collateral caps, enabling the loop to grow further.
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Pendle’s USDe Partnership Poised to Push PENDLE Past $7
Interesting timing for this alliance as the token’s price sits around its yearly high. From TradingView’s technical analysis (7/8/25), the token has overcome significant resistance levels to verify them as a level of support, with bullish signs coming from both the RSI and the MACD.
Wave analysis identifies a strong 1-2/1-2 Elliott Wave formation, indicating the token has entered the third sub-wave of a larger bull cycle, usually the most explosive stage of a rally. The focus for the first major target now has to be the $7 level, with possibilities for a charge towards the $7.80 level. Should the 2025 highs be breached, double-digit prices could be imminent.
USDe and its tokens, Staked USDe and eUSDe included, now make up the majority of TVL on the token, providing a stable foundation for future growth. Along with a technically bullish chart and a revenue-positive contract, the token is positioned for further growth both in terms of adoption and market cap.
With momentum on its side, this Pendle-Ethena alliance not only has the potential to redefine the DeFi yield policies but could be the catalyst that pushes the token towards the next level of price discovery.
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