ETH Pendle Index

The voting follows a community discussion, which took place in Locus Discord, and aims to gauge community sentiment about whether or not the index should be released in its current state.

Preface For the past few months the team has been relentlessly at work on the ETH Pendle Index. The initial idea came up when Pendle started gaining traction due to the point farming craze. The protocol has exploded in popularity since the start of 2024 and now sits at $4B+ TVL, a tenfold gain since early 2024.

Right now Pendle is THE place to earn ETH and stablecoin yields, recognized by many DeFi veterans and large-scale capital allocators. Many retail investors, however, are intimidated by Pendle’s complexity, which is the reason we went on to develop an accessible index product.

pendleETH allows novice users to provide liquidity on Pendle with ease, participate in the points farming meta and receive multiple airdrops. With one click, users get exposure to a basket of ETH liquid restaking tokens (“LRTs”) deployed in Pendle liquidity pools, earning Pendle incentives, Eigenlayer points, points of liquid restaking protocols and ETH staking yield.

As we believe Pendle is here to stay, the index is designed with a long-term vision in mind, making it easy for Locus to easily add and replace outdated LP strategies without any participation on the end user’s side.

Overview ETH Pendle Index is an index of LP strategies including Pendle LP positions for multiple ETH liquid staking tokens (LRTs). In the current form it features LPs with three major liquid restaking tokens: eETH by Ether.fi ezETH by Renzo rsETH by KelpDAO

Expected return: each strategy is expected to perform at roughly 20% APY. The number is based on performance history of the aforementioned Pendle LPs. This figure excludes airdrops and doesn’t account for ETH price fluctuations.

Chain: Arbitrum The index is deployed on Arbitrum, making it cheap to interact with even during the times of high load. For most of the major LRTs, Arbitrum also serves as the second deployment chain after Ethereum.

Vault safety score: 3.5/5 Simplicity: 4/5 Longevity: 3/5 Protocol safety: 3.5/5

Despite Pendle being a thoroughly audited protocol with a track record of roughly 3 years without exploits, the index also relies on multiple liquid staking providers. These protocols are new to the market and while all of them are audited, they do not have enough track record to be considered safe. LRTs also pose a risk of de-peg, meaning they can trade below parity against ETH. All of the LRTs undergo a due diligence process by Locus and we ensure that the assets are well collateralized and able to be redeemed into ETH.

All of these factors make the index lean towards medium risk.

Strategy management As Pendle LPs are subject to expiry, the funds are regularly rolled over to more relevant pools to ensure the capital is always utilized. All the replacements will be telegraphed on Discord in advance.

A strategy can be replaced before expiry if there are concerns about its health or returns. These replacements will also be communicated beforehand.

Points distribution Pendle LP strategies accrue points, which are later converted into tokens of liquid restaking providers. Due to the index architecture, users do not earn points directly. Instead, the vault claims tokens upon TGE and airdrops them to users according to their contributions.

Snapshots of user balances are taken daily in order to distribute airdrops in a fair manner.

Fee structure 10% performance fee is charged ONLY on yield and is taken upon harvest. ETH price fluctuations are NOT subject to any fees. 0.5% annual management fee is charged on all deposits upon harvest.

Audit links and detailed information about the utilized protocols will be provided upon launch.