Pendle's Deflationary Pivot: 92% Emission Reduction and 40% Liquidity Depth Boost
Pendle Finance has made significant strides in reducing emissions and increasing liquidity depth through its Algorithmic Incentive Model, known as AIM. Introduced in January 2026, AIM replaced the old manual voting process for allocating incentives with an automated approach driven by total value locked and swap fee data.
The original goal was a 30% reduction in emissions, but Pendle achieved a staggering 92% decline by mid-September 2026. Annual inflation for the PENDLE token now sits at just 0.2%, outpacing Bitcoin's current inflation rate after the 2024 halving of roughly 0.85%.
The protocol channels up to 80% of its revenue into open-market purchases of PENDLE tokens, with cumulative buybacks surpassing 2.68 million PENDLE by late September 2026, worth approximately $3.7 million. The annualized buyback rate sits at roughly 2% of supply.
The sPENDLE staking overhaul has also contributed to the shift, allowing users to stake their tokens for just a 14-day unstaking period, compared to the old multi-year token locks required by vePENDLE. Over 100 million PENDLE tokens are now staked through the new system, representing roughly 36% of total supply.