The Optimist Twitter Spaces with Penpie

In Optimist’s Twitter Spaces, which took place on October 23, 2023, Charlie is joined by Radlin and Lew from Penpie to discuss Penpie’s relationship with Pendle Finance, Penpie’s revenue model and tokenomics, and more! Read our notes below to learn more.

Background

Charlie (Host) – Co-Leader at The Optimist

Radlin Abbott (Guest) – Growth Lead at Penpie and Campie

Lew (Guest) – Marketing at Penpie and Campie

Penpie – a SubDAO by Magpie that’s set to revolutionize Pendle Finance

Campie – a SubDAO by Magpie created to fortify Camelot DEX

Magpie – a multi-chain DeFi platform providing yield & veTokenomics boosting services, supporting top-tier projects

Introduction

Radlin says that he is the growth lead for Penpie, responsible for marketing. He shares that his background is in the oil and gas sector, having worked for several major companies like Chevron and Shell. Due to Covid and changes in the oil and gas industry, Radlin switched to crypto, initially investing in NFTs.
Radlin elaborates that after joining a startup crypto project as a project lead, he discovered his passion for marketing. His project management background helped him adapt to the startup environment where everyone wears multiple hats.
Lew says that he initially explored crypto in 2011 but quit trading in 2017 due to theft. He returned in 2020-2021 after noticing a small amount in his Binance wallet. He then worked for other blockchain projects before joining the Magpie team, where he now works on Penpie and Campie.

Mechanics of Penpie

Lew explains that Penpie is a yield-boosting platform built on Pendle Finance. It targets users who do not want to lock their tokens but still want boosted yields. Penpie acquires and locks $PENDLE tokens for them, providing boosted rewards through its $vePENDLE treasury. The platform has $9 million in its $vePENDLE treasury and stands as the number one yield-boosting platform on Pendle Finance.
Charlie summarizes Lew’s explanation, drawing a comparison between Penpie and Convex, a yield-boosting platform for Curve. He finds the analogy helpful for understanding the mechanism behind Penpie.
Radlin adds to the explanation, saying that Penpie operates similarly to how Convex operates for Curve. He also mentions that Penpie is part of the larger Magpie DAO ecosystem, which includes other yield-boosting platforms for different protocols.
Radlin says that Penpie is one of the sub-DAOs under Magpie. He says Magpie is built on Wombat Exchange and Penpie is built on Pendle. He also mentions other sub-DAOs like Radpie and Campie, which are built on Radiant and Camelot, respectively.

Relationship Between Penpie and Pendle

Lew explains that Penpie builds on Pendle because of its unique utility in the DeFi space. He says that many users don’t want to lock their tokens for an extended period, a requirement on Pendle. Penpie addresses this issue by offering boosted APYs, thus expanding Pendle’s user base. Lew mentions that Penpie benefits from Pendle’s platform revenue, which they distribute to token holders.
Radlin adds that Penpie locks the tokens they receive for the maximum possible time of two years, reducing $PENDLE’s circulating supply. He also notes that Penpie makes up about 35-36% of Pendle’s TVL, highlighting the mutually beneficial relationship.
Radlin explains that $mPENDLE serves as a liquid wrapper for $vePENDLE tokens, which are otherwise locked. He says the protocol perpetually locks these tokens for two years, thereby lowering the circulating supply of $PENDLE tokens.
Lew elaborates that the rewards accrued from locking $PENDLE tokens go to $mPENDLE holders. However, he does not specify the percentages of how these rewards are distributed between $mPENDLE holders, protocol revenue, and LP boosting.

Revenue Models and Tokenomics

Lew says that on Pendle Finance, locking your $PENDLE tokens only gives you swap fee revenues and voting power, without other types of revenue. However, converting $PENDLE tokens to $mPENDLE at Penpie provides more flexibility and additional revenues. The platform takes 20% of the boosted APIs as revenue, of which 12% goes to $mPENDLE holders and 8% to $PNP holders.
Lew states that in the future, 3% of liquidity provider emissions will be reserved for $PNP buybacks. $mPENDLE holders will have the flexibility to trade their $mPENDLE tokens back to $PENDLE tokens on the Wombat exchange. The current peg amount for $mPENDLE to $PENDLE is around 95%, which Lew views as optimal for $PENDLE holders.
Charlie finds the mechanism fairly simple to understand and asks about the mechanisms ensuring a tight peg between $mPENDLE and $PENDLE.
Radlin explains that they use a smart converter, a Pendle pool, and a stability vault to maintain the peg. He mentions that the $mPENDLE pool has exceeded their expectations and talks about different strategies one can employ on the platform for looping rewards.
Radlin praises the revenue loop for those who are part of the $mPENDLE pool. By locking up your $PNP, one can gain revenue share and other benefits, creating a potentially infinite loop of rewards.
Lew adds that the SY revenues generated on the $mPENDLE pool will contribute to bringing the peg closer to a one-on-one ratio if it’s below 95%. If the peg is above 95%, then the SY rewards will be converted to $mPENDLE to increase the $vePENDLE treasury.
Lew says that the smart converter was developed around two months ago, with the $mPENDLE pool being newer.

Exploring the Dynamics of Vote-Locked Tokens and Voting Power in Pendle Finance’s Bribing Markets

Charlie asks about the role of vote-locked PNP ($vlPNP) in the Pendle bribing markets and the voting power held by different types of token holders in the system.
Lew explains that holding $PNP tokens and locking them in as $vlPNP gives you proportional voting power on Pendle Finance. The voting power is distributed according to the amount of $vePENDLE held. Lew mentions that they control over 31% of the total voting power by holding $vePENDLE and allocating it to their loyal $PNP holders.
He details that once tokens are locked and votes are cast, snapshotting allocates the emissions based on the most-voted pools. Lew highlights the system is attractive for protocols wanting deep liquidity. He also mentions that the $PNP tokens offer a more flexible and cost-effective way for users to get voting power on Pendle Finance.
Radlin adds that investing in $PNP and locking it as $vlPNP is three to four times more efficient in terms of voting power compared to buying $PENDLE and locking it as $vePENDLE.
Lew reiterates that locking $PNP for 60 days is a major benefit compared to a two-year lock-in period for $PENDLE, underlining its flexibility.
Charlie points out the separation of benefits between $vePENDLE and $vlPNP and asks if protocols could directly bribe $vePENDLE holders before Penpie’s bribe market was established.
Lew says that protocols can indeed directly bribe $vePENDLE holders, but doing so is less efficient than bribing $PNP holders. He notes that they hold a large treasury of $vePENDLE and would end up getting the majority of the bribes if protocols chose that route. This is why it’s more cost-efficient for protocols to bribe $PNP holders instead.

Unique Features of Penpie

Radlin says that Penpie’s bribe efficiency is the best in the market, allowing protocols to get a significant ROI for every dollar spent on bribes. He believes that the bribery market is crucial for increasing APR and attracting more liquidity. He adds that both protocols and individual users can bribe pools, adding utility for vault lock $PNP holders.
Radlin highlights that voting power now allows protocols and users to profit or support pools they are invested in. He notes that users themselves can bribe pools if they find it profitable, highlighting the flexibility of their system.
Lew says that their key advantage is their experienced team who have learned from previous projects. He mentions they focus on user experience and simplicity, avoiding unnecessary complexities. They also run various campaigns to convert $PENDLE tokens to $mPENDLE and do not emit unnecessary $PNP tokens.
Radlin agrees with Lew, adding that their repeated experiences with multiple protocols provide them an edge over competitors. He cites the team’s experience across multiple projects as the main differentiator and believes that this repetition and experience will set them apart from the competition.

Role of PNP Token in User Engagement

Radlin explains that PENDLE Rush is designed to incentivize users to convert their $PENDLE into $mPENDLE. Users receive $vlPNP and may be allocated to different IDOs depending on the current campaign. The aim is to lock up more $PENDLE into $mPENDLE.
Lew adds that PENDLE Rush campaigns offer additional incentives like receiving more $mPENDLE tokens and extra $PNP tokens proportional to the amount converted. Lew highlights they are not issuing unnecessary $PNP emissions to other pools; they focus on acquiring $PENDLE tokens.
Radlin stresses that they are protective of their $PNP token and do not want to flood the market. They have a proposal for $PNP buybacks which will be used for future incentives, limiting sell pressure.
Lew mentions that additional rewards will come from swap fee revenues in the form of $PNP buybacks, which will be distributed as brand rewards, avoiding the need to issue more $PNP tokens.

Community-Driven Aspects and Optimism Market Integration in Pendle and Penpie

Charlie says he loves sustainability and finds Pendle valuable for protocols and users alike, especially those who have a stake in $PENDLE emissions and deep liquidity.
Lew explains that Penpie doesn’t have any VCs or other kinds of investors. He says it’s a community-driven protocol with no team allocation for the $PNP token. He highlights that precautions have been taken to preserve the token’s value and is cautious about $PNP emissions.
Charlie finds it amazing that the team has no allocation in the token. He looks for community-driven aspects when researching new protocols and feels it aligns with DeFi ethos.
Lew says that Optimism is their latest integration with currently only Lido and Rocketpool. He expects growth as Pendle expands market features on Optimism due to receiving an Optimism grant.
Charlie shares that he sees long-term value in Pendle and finds it a good fit for the sophisticated Optimism user base. He is excited for new pools to appear and looks forward to utilizing them.
Radlin agrees with Lew and Charlie’s Optimism sentiment. He mentions Pendle received an Optimism grant and says Penpie will also apply for one. He looks forward to increased liquidity on Optimism which will encourage more pools in Pendle.

Check Out These Important Links

Show Information

Medium: Twitter Spaces
Show: The Optimist
Show Title: Penpie <> The Optimist
Show Date: October 23, 2023