Pendle Skyrockets to Second-Largest DeFi Protocol on XLayer in Record Time

Pendle's rapid growth on XLayer has catapulted it to become the second-largest DeFi protocol on the network, boasting an impressive $37.5 million in TVL within just under a month.

This remarkable feat is even more striking considering nearly all of that capital flowed through a single market built around USDG, the Paxos-issued stablecoin backed by USD reserves and Treasuries.

Pendle launched natively on XLayer around August 11, 2026, and its TVL surged by 268% over a seven-day stretch within weeks, according to DefiLlama data.

The catalyst for this growth was a combination of liquidity incentives and cross-protocol integration. Pendle rolled out LP rewards designed to attract capital into its USDG yield market, while Aave V3 on XLayer accepted Pendle's PT-USDG as collateral, with a loan-to-value ratio of 93.59%.

This classic DeFi composability loop allowed users to deposit into Pendle's yield market, receive PT-USDG, post it as collateral on Aave, borrow against it, and potentially reinvest, creating additional demand for the underlying asset and pulling more capital into both protocols simultaneously.