Dialogue Pendle Co-Founder TN LEE: V2 Stability, Boros Sets Sail, Creating the "Apple" of the Decentralized Finance Marketplace

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Editor: J.A.E

From Kyber to Pendle, TN LEE’s entrepreneurial journey over the past decade has spanned the key cycles of the Decentralized Finance (DeFi) Marketplace. As an early participant in the DeFi ecosystem, he not only accumulated extensive business experience but also keenly identified the huge potential of the Interest Rate Marketplace during DeFi Summer. In the world of DeFi, Interest Rate has always been the core variable driving capital flows and user decisions. Based on his deep understanding and practical experience in the Interest Rate Marketplace, he formed a team and founded Pendle, gradually building a complex and innovative product system centered around “Interest Rate.”

Recently, Pendle co-founder TN LEE was interviewed by PANews, where he candidly stated that Pendle will not offer any Spot or Futures Trade, but will focus more on Interest Rate, aiming to create the best Interest Rate products for DeFi and beyond. Looking ahead, he believes Real World Assets (RWA) and Bitcoin Return will be key directions for Pendle and the entire DeFi ecosystem. He also shared his thoughts on product portfolio, user experience, ecosystem rise, and industry collaboration.

Below is the full interview:

Strategic Evolution: From locking ultra-high APY to opening Stablecoin Marketplace, to leveraged Interest Rate Trade

PANews: It’s an honor to interview you. Please introduce yourself and review Pendle’s development journey.

TN LEE: I’m TN, co-founder and CEO of Pendle. About 10 years ago, I entered the cryptocurrency field, starting my career at KyberSwap. As one of the founding team members, I stayed at Kyber until the end of 2018.

After that, I started a business with my current co-founders, trying out many product ideas in the crypto space, and even ventured into AI, until we finally decided to build Pendle in 2020.

The idea for Pendle was formed during DeFi Summer in 2020, because we wanted to lock in those yields as high as 10,000%~20,000% APY. Our core motivation for building Pendle was “locking Interest Rate,” since users quickly realize the value of certainty.

Fast forward to mid-2021, we launched the product. Due to its complexity, it didn’t attract much attention. It was also the start of a bull run, so people probably didn’t have time to learn new products. But when we supported some high APY Assets, especially Wonderland’s wMEMO, our volume grew from about $50,000 per day to nearly $5 million in a short period.

Throughout 2022, we mainly optimized the product and launched the current features.

In 2023, we focused on building use cases and establishing the Pendle brand around core trends and narratives—first with early LST (Liquidity Staking Token), then in Q3 and Q4 with close collaboration with the Arbitrum ecosystem to expand our appeal.

A major breakthrough happened in Q1 2024, when Pendle became more involved in the Eigenlayer and LRT (Liquidity Restaking Token) ecosystem. At that time, protocols began tokenization of points, allowing users to obtain attractive fixed Interest Rate by purchasing PT (Principal Token). If users wanted to Trade points, they could buy YT (Yield Token). These features continued, and Pendle slightly shifted its narrative. At the same time, we kept focusing on the Ethena Marketplace and launched some BTC Marketplace in late Q3 and throughout Q4, which brought considerable TVL to Pendle, at one point accounting for about 25%.

PANews: There’s already a lot of information about Pendle’s mechanism, so let’s focus on Pendle’s current status and future. Please Share Pendle’s strategic path.

TN LEE: Strategically, at the beginning of this year, we realized Stablecoin would be a particularly important part of Pendle’s rise plan. So, we adjusted our positioning to focus more on Stablecoin and opened the protocol so any issuer could permissionlessly launch their Marketplace on Pendle. We also made Marketplace creation seamless in the UI (User Interface). Benefiting from Stablecoin rise, Pendle’s TVL peaked at about $13.5 billion in September.

(Related reading: DeFi Lego Game: Unveiling the $1 Billion Growth Flywheel of Ethena, Pendle, and AAVE)

PANews: Recently, you launched a new product called Boros. Please introduce it as well.

TN LEE: By the end of 2023, we realized the Marketplace needed a product that could create leveraged Return, because most sustainable Return, like ETH Stake Return or SOL Stake Return, are mean-reverting. Some days are high, some are low, but over time, they usually revert to a mean—ETH around 4%, SOL around 6-7%, with Fluctuation in a small range.

This means if users want to profit from small Interest Rate Fluctuation, they need a large amount of underlying Assets. For example, if a user wants to earn a 3%-4% spread with $10, it would take a long time to make a meaningful amount. Users need $1 million in nominal Principal to make meaningful money when Interest Rate moves from 3% to 4%. That’s why we developed Boros.

Boros is a leveraged Interest Rate Trade product. In structure and proposition, it’s very similar to Pendle V2. However, the use case is different. V2 focuses more on point tokenization and Trade.

Boros is suitable for all mean-reverting Interest Rate, starting with Funding Rate. Take BTC perpetual Futures Funding Rate on Binance as an example: the average annualized rate may be around 10%, sometimes negative, sometimes above 20%, but over time, it’s about 10%. The same goes for Stake Return—some days 2%, some days 4%, but usually Fluctuation between 2%-4%. These Interest Rate don’t Fluctuate much, so they need leverage to amplify the movement. If users Trade well, they can earn meaningful wealth.

(Related reading: Pendle’s Strategic Expansion: Boros Emerges, Innovating the Funding Rate Trade Paradigm)

PANews: Boros is a product from 0 to 1, and that’s usually a tough process. Besides Boros, Pendle also has V2. How do you balance progress between the two products?

TN LEE: Both are important products, but since they’re at different stages, they require different skill sets. V2 is much more mature, handling billions of dollars in value and has existed for years, so it needs more use cases and focus on distribution. Boros is different—it should focus more on product stability and PMF (Product-Market-Fit).

It’s important to realize these are different operating models. If Pendle had two products both at 0 to 1, management would be much harder. But now, with one more mature product, we can assign the right team to focus on its expansion. For Boros, we’ll allocate members who are better at handling uncertainty and running lots of experiments to grow it.

“Apple-style” Product Architecture: V2 focuses on scale, Boros explores PMF

PANews: Pendle now has two major product lines: V2 and Boros. What kind of product structure do you want to build?

TN LEE: I think you can view Pendle as the main brand, with an “arch-shaped” product portfolio. Pendle is at the top, with at least two pillar products: V2 and Boros. They serve different use cases and may target different users, but all fees or income ultimately belong to the PENDLE token.

That’s the core idea of the “main brand.” I actually want to use Apple as an analogy. Apple is the main brand at the top, but it has product lines like iPhone and AirPods.

This is also our approach to sustainable development. Pendle will not offer any Spot or Futures Trade. We’ll focus more on Interest Rate, creating the best Interest Rate products for DeFi and broader fields.

PANews: Any plans for Pendle V3 or other new products? What designs or features do you plan to add?

TN LEE: Yes, it’s in progress. We’ve started some research topics, but it’s too early to Share details. I can only outline a general future direction.

I think Pendle has now become a fairly important part of any DeFi ecosystem. We firmly believe that Interest Rate is the most important factor in investment, Borrow, and many other financial decisions. If users want to Borrow, a 3% Interest Rate versus 5% makes a big difference, and the same goes for investment decisions.

Our core is to make all Interest Rate tradable and easy to manage. So far, we’ve mainly focused on building V2, which has become a key tool for many protocols to guide Liquidity long-term. Especially this year, it’s focused on supporting Stablecoin and L1/L2 Liquidity guidance.

Looking ahead, I think targeting real-world Return opportunities is very important—maybe private credit APY, money Marketplace APY, or corporate bonds gradually entering DeFi. These can relate to both V2 and Boros. We’ll gradually expand the product portfolio to support a wider range of Assets, not just Stablecoin or other L1/L2 deposit activities.

We envision V2 and Boros both having relevant use cases. In particular, I think Boros makes more sense for Interest Rate that are quite stable and usually Fluctuate in a small range, like corporate bonds, which typically Trade between 7%-10% with little Fluctuation, so the amplification effect is more necessary.

PANews: What are your expectations for Boros’s rise?

TN LEE: Regarding the strategies we’re exploring, Boros is a very early product, only launched two and a half months ago, so we’ve been gradually raising the cap. Initially, we were Conservative, since we had no track record and mainly wanted to ensure product safety and stability. Now, with more data points, we know what to relax and what to tighten—these are important changes we’ll implement over time.

Currently, Boros only supports BTC and ETH Marketplace on Binance and Hyperliquid. In the future, we hope to support more channels, like OKX, Coinbase, Bybit, and many other exchanges. Likewise, we want to support more Assets and Marketplace on these channels, such as XRP, SOL, and WLFI. So, from a rise perspective, the ideal is to add channels, add Marketplace, and shorten terms.

PANews: You’ve emphasized Boros won’t issue a token, and all Return will go to the PENDLE token. How will Pendle’s tokenomics evolve to better capture protocol value and incentivize long-term holders?

TN LEE: We prefer to keep things as they are—PENDLE token will continue to be the value accrual vehicle for all mechanisms. However, once we determine the Side for Boros, we’ll reconsider how to accrue value.

The reason for maintaining the status quo is that Boros is a new product with no precedent. Since Boros is a 0 to 1 product, we need to find PMF. I think it’s naive to commit to a value accrual mechanism before the product achieves meaningful PMF and generates significant income. So, we prefer a flexible approach: build the product on Boros, reach PMF, generate healthy income, and then commit to a more meaningful value accrual mechanism.

Abstracting PT as “bank fixed deposit,” bullish on RWA and Bitcoin Return opportunities

PANews: Pendle may have a high understanding threshold for ordinary users. How do you balance product complexity and user experience?

TN LEE: I think it largely depends on packaging and distribution. For distribution, we want to focus more on the fixed Interest Rate part and leave the speculative part to the most mature users on the protocol.

From a fixed Interest Rate perspective, it’s actually not hard to understand. Fixed deposit is already a very common product—every bank offers fixed deposit. Similarly, if we package PT as a product that allows users to get a fixed Interest Rate, we can build it like a fixed deposit product. If you want to lock in a 5% or 10% Interest Rate, users don’t even need to know about PT/YT—they’ll be abstracted away. Users just need to know that if they deposit, they’re guaranteed to get those Return at the end of the term. For most fixed Interest Rate products, the distribution channel is more important—it could be a wallet or a CEX wealth management product.

YT is still an important part, but its promotion may be more targeted at mature users—maybe market makers or experienced DeFi players who can judge Interest Rate trends.

PANews: As Pendle’s TVL and volume rise, the protocol ecosystem consists of LPs and PT/YT holders. How do you view the roles and interests of different participants in the ecosystem? How do you ensure the long-term health of the “growth flywheel”?

TN LEE: LPs can be anyone. The reason they want to be LPs is that when providing Liquidity, if they hold YT, they may also benefit from token rise and get some Return protection. That’s the user profile for YT holders—mainly smaller retail investors. Because YT is capital efficient, it requires much less initial capital but can generate meaningful Return for users, while PT is mainly for larger funds.

I believe PT and LP will become more accessible to retail investors, but this must be packaged through wallets or other protocols, so it needs an extra layer of abstraction—like a wallet or other products—so retail users can participate in these opportunities without directly engaging with Pendle.

PANews: As a DeFi builder, what advice do you have for newcomers?

TN LEE: I’m still learning myself and wouldn’t call myself an expert, but I can Share some experience. I’ve realized that as a builder, seeking help is beneficial. In my experience, when I ask for help, most of the time people are very willing to offer assistance or guidance, which has benefited us greatly. If I had to list all the names, I couldn’t finish. Many people have helped or known about Pendle, and that’s because our team (not just me) is willing to reach out and seek help.

I remember in the early days, we weren’t good at marketing, so we contacted teams like chainlink and Binance Wallet. They were happy to Share things they’d done—not confidential, just best practices we could observe and improve on. Likewise, I think for new builders, this may be one of the most important things. The beginning is tough, but knowing there are peers truly willing to help and support is very helpful.

We’re also happy to collaborate with other protocols. We’re a second-order derivative, and we also need to help first-order derivatives grow, which in turn drives our own rise—just like our collaboration with Ethena. By allowing Interest Rate to be fixed and created, we provide value and utility to the Ethena community, enabling Ethena to rise more comfortably at their scale, and we benefit as well.

PANews: What do you think will be the most important innovations and trends in the DeFi Marketplace in the next three to five years?

TN LEE: Actually, I think there are two trends with high certainty, neither of which are breakthrough technologies, but more from a Marketplace correlation perspective. First, we want to participate in Real World Assets (RWA) Return opportunities. As the US improves its crypto regulatory framework, we’ll likely see traditional institutions more comfortably participate in the crypto industry and DeFi Marketplace. I believe this will create more opportunities in crypto, and Pendle will strive to capture these upcoming opportunities.

Second, I believe sustainable Bitcoin Return will become increasingly important. How users can easily obtain Bitcoin Return—whether through Borrow or some structured product—and do so in a way that generates meaningful and sustainable Return will be crucial. I think this is a holy grail—Bitcoin is the largest single Asset in the entire crypto space. So, if we can generate Return from Bitcoin, it will have a huge impact from both utility and value creation perspectives.