🥛 PRO | Pendle is heavily undervalued 🤫

GM, this is Milk Road PRO – the newsletter that delivers you piping hot alpha, fresh from the oven, each and every Saturday.

We’re always on the lookout for projects with strong fundamentals — the kind that are either already generating revenue or are just about to flip the switch and start monetizing.

That’s nothing new. 

But here’s something you don’t see often in this space: a project that’s actually raising its prices.

Yes, you heard that right. Pendle, a yield derivative platform we’ll be analyzing today, is raising its take rate from 3% to 5%.

That's a very strong signal to market participants. When a project has confidence to raise prices, it usually means one thing: serious market strength.

But before we dive deep into any project, we want some confirmation that it’s actually worth our time. 

So we took a look at how Pendle is performing in terms of revenue right now.

Pendle is currently pulling in around $20 million in annualized revenue. Honestly, that’s pretty solid. Numbers like that would easily rank it among the top-20 protocols in the entire crypto space.

P.S. Pendle’s revenue is expected to jump by around 30% thanks to the recent increase in its take rate.

On top of that, some of our Milk Road PRO community members actively use Pendle and have been asking us to do a deep dive on the project. 

So, Pendle has quickly become a project that's too interesting and relevant for us to ignore any longer.

Oh, and here’s one more thing that makes Pendle stand out…

If you hold their token $PENDLE and lock it up, you get a cut of the protocol’s revenue — kind of like earning dividends.

But don’t expect the usual boring 4-5% dividends you see with traditional stocks. 

👉 In 2024, they’ve delivered a massive 40% payout. Yes, you read that right!

And it gets better. They’ve recently made a smart move: rewards are now paid out in stablecoins instead of $PENDLE tokens, which could mean less selling pressure on the token. 

When you see this many updates and bullish signals backed by solid fundamentals, there’s zero chance we’re not taking a closer look.

But there's always more to the story. So let’s find out what’s really going on:

• What exactly is Pendle’s product?

• How are they making money right now?

• What gives them a competitive edge?

• Is $PENDLE worth buying?

If you are new here, know this: Every time we look at a new project, we use something called the Milk Road Playbook.

Never heard of it? No problem. You can check it out here. 

It explains how we analyze each project in more detail. It’s our go-to framework for breaking things down and figuring out if something’s worth our/your investment (or not).

And that's exactly what we want to do today for Pendle. 

So without further ado, let’s jump right in. 

TEAM

We always start with the team—because it’s one of the most crucial ingredients behind any successful startup.

The team is the engine that drives the project forward, especially in the early days. 

You want to make sure they have the skills to actually pull it off and that they’re committed for the long run, not just here to cash out and vanish.

So here’s what we found out about Pendle’s founding team.

Pendle launched in 2021, created by TN Lee, Vu Nguyen, and two anonymous developers known as GT and YK. 

Let’s quickly introduce the two known founders and take a look at their backgrounds.

• Before starting Pendle, TN Lee—now the CEO—was leading Business Development at Kyber Network, a decentralized exchange aggregator. His background in DeFi and blockchain from Kyber played a key role in building Pendle’s unique approach to yield tokenization and trading.

• Vu Nguyen, Pendle’s Chief Engineer, is a three-time Math Olympiad gold medalist who graduated with a degree in Computer Science from Singapore. He previously developed smart contracts at Digix, a project that focused on gold tokenization. 

Both founders have been active in the space for years, contributing to other projects long before launching Pendle, so they’re definitely not new to the game.

What’s interesting is that one of them comes from a BD/Sales background — something you don’t see often in crypto founders. And honestly, that’s an underrated skill when it comes to growing and scaling a product.

True, they don’t come from the traditional finance (TradFi) world—which some might expect for a project like this, but even without that we feel pretty good about what these two bring to the table.

Plus as we’ll see later they don’t have any vested tokens left, yet they’re still here, building and shipping. That says a lot about their commitment. 💪

Alright, let’s take a look at the size of the market Pendle is going after.

TAM (TOTAL ADDRESSABLE MARKET)

When it comes to traditional finance, interest rate derivatives are some of the biggest beasts in the game. 

And that’s exactly what Pendle is bringing onchain.

This market is absolutely massive. It's estimated to see $400 to $500 trillion in trading volume every year.

So when you stack that next to Pendle’s $36B in 2024, it’s clear they’ve only scratched the surface. The upside here is huge.

But it’s not just the volume that’s impressive — it’s the growth that really stands out.

In 2024, Pendle’s trading volume grew by a staggering 90x compared to 2023.

That kind of explosive growth doesn’t happen by accident. It’s a strong signal that more users are using their products. 

But let’s not get too ahead of ourselves.

TLDR: The market Pendle is aiming for is absolutely massive. We’re talking hundreds of trillions. Even if they capture just 0.1% of it, that would still mean huge potential upside and serious profits.

Alright, let’s finally get into the good stuff — the product itself.