How to Benefit From the Pendle, Ethena and Aave Loop | Credit: Hameem Sarwar
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Key Takeaways
Pendle and Ethena have formed a symbiotic relationship.
The PENDLE price has almost broken out above its yearly high.
Can PENDLE break out and move to a new all-time high price?
Pendle has made headlines by partnering with Ethena, integrating the rapidly growing USDe into its yield-generating ecosystem.
This collaboration introduces a profitable looping strategy that leverages Pendle’s Principal Tokens and Aave’s borrowing market.
Since PENDLE is close to breaking out from its yearly high, the partnership could be the spark needed to propel it to the next level.
Pendle Partners With ENA
Yesterday, Pendle announced the positive news that USDe is live on HyperEVM, and the response has been strong right out of the gate.
The initial pool launched with a limited capacity and a market capitalization of $100 million.
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Since Pendle splits its assets into the Principal Token (PT) and the Yield Token (YT), the integration with USDe has created a loop by pulling Aave into the mix.
The loop works as follows: The user starts by buying the PT with USDe to earn a fixed yield and then borrows USDC against it on Aave.
Afterward, the user can use that USDC to buy more USDe and start the loop from the beginning.
The strategy is profitable since yields on the PT are, on average, 8.8% higher than Aave’s borrowing costs, which are between 4% and 6%.
Nevertheless, the loop has been highly profitable for users and the protocol. AAVE keeps 10% of borrowing costs while Pendle charges 5% on PTs..
Pendle and Ethena have formed a highly symbiotic relationship, since USDe accounts for $4.01 billion (60%) of the entire protocol’s Total Value Locked (TVL).
To help minimize risk, the Aave DAO pegged USDe directly to USDT’s exchange rate, greatly decreasing the liquidation risk factor.
However, there is still one catch: If yields on the PT drop below the borrowing costs, the loop’s profitability vanishes.
Whether this strategy can scale further depends on whether Aave will continue raising collateral caps.
Ethena has benefited from the massive increase in USDe supply, which is at a new all-time high.
Over 60% of the TVL on Pendle is from USDE and its derivatives, Staked USDe and eUSDe, a Pendle native wrapped version of sUSDe for DeFi integration.
Pendle Price Analysis
The long-term PENDLE price analysis is bullish, as the token has reclaimed the middle of its long-term range.
Besides the reclaim, PENDLE has broken out from and validated a resistance trend line as support (green icon).
When factoring in the positive Relative Strength Index (RSI) and Moving Average Convergence/Divergence (MACD) readings, it suggests a push toward the range high of $7 is very likely.
The wave count also shows an extremely bullish 1-2/1-2 wave structure (green & black), which suggests PENDLE is starting sub-wave three of wave three.
Since this is usually the most rapid portion of the upward movement, it fits perfectly with the long-term analysis and confirms the movement toward the range high.
Disclaimer:
The information provided in this article is for informational purposes only. It is not intended to be, nor should it be construed as, financial advice. We do not make any warranties regarding the completeness, reliability, or accuracy of this information. All investments involve risk, and past performance does not guarantee future results. We recommend consulting a financial advisor before making any investment decisions.
Valdrin Tahiri is a cryptocurrency analyst and reporter at CCN, specializing in technical analysis with a focus on Elliott Wave theory, on-chain metrics, and fundamental research. He brings over seven years of experience in the crypto space as both a trader and writer.
He discovered cryptocurrencies in 2017 while earning his MSc in Financial Markets at the Barcelona School of Economics, which sparked a deep interest in blockchain and market dynamics. Since then, he’s contributed to top crypto outlets like BeInCrypto and CoinGape.
Valdrin also served as Community Manager of BeInCrypto’s Telegram group for three years, helping grow it into one of the largest crypto communities worldwide. His expertise in market structure and price patterns allows him to break down complex trends into clear, actionable insights.
He’s published thousands of articles covering altcoins, Bitcoin cycles, and macro trends.
