PIP #18 - Optimizing Penpie’s Revenue Allocation and Incentive Structure

Abstract

Following a series of proactive discussions between the Penpie team and Pendle, we have successfully secured a Pendle airdrop allocation, which will be distributed to benefit mPENDLE holders. To further strengthen the sustainability of Penpie’s ecosystem, this proposal also introduces adjustments to revenue allocation and operational funding. These include repurposing existing revenue streams, adjusting PNP emissions, and introducing a 5% fee on bribes to ensure long-term financial stability.

These measures aim to optimize incentives, enhance Penpie’s operational efficiency, and support continued ecosystem growth.

Motivation

Penpie’s ability to scale and sustain long-term value creation relies on stable operational funding and efficient resource management. As the ecosystem expands, ensuring sufficient financial support for technical development, security enhancements, and ongoing operations is crucial. Without a structured approach to sustainability, operational inefficiencies and budget constraints could limit growth and innovation.

This proposal introduces several key adjustments to reinforce Penpie’s financial stability while enhancing user rewards and optimizing ecosystem incentives:

Pendle Airdrop Reward Distribution

• Securing Pendle airdrop rewards is a significant win for the Penpie ecosystem. To maximize user benefits, these rewards will be converted to PENDLE and distributed directly to the mPENDLE Staking Pool on Arbitrum.
• This approach ensures higher, stable returns for mPENDLE holders, making mPENDLE more attractive for staking while avoiding arbitrage opportunities that could arise from claim-based airdrops.
• Additionally, since some airdropped tokens lack liquidity on the Arbitrum chain, converting all rewards to PENDLE ensures a seamless user experience and improves liquidity efficiency.

Removal of Cross-Chain SV mPENDLE Pool

• Based on community feedback and data analysis, the SV mPENDLE Pool is no longer an optimal reward mechanism. Over time, its effectiveness has declined, and continuing its operation adds unnecessary complexity to the reward distribution model.
• This proposal suggests removing the SV mPENDLE Pool and redistributing 100% of its PENDLE rewards to the mPENDLE Stake Pool on Arbitrum, ensuring a more concentrated and effective reward structure.
• To facilitate this transition, a lossless exit mechanism will be provided, allowing SV Pool participants to withdraw their assets with minimal cooldown time.

PNP Emission Reduction Plan Section

To ensure a balanced and sustainable incentive structure, adjustments to PNP emissions are necessary. Currently, mPENDLE Staking on Ethereum generates nearly 10% PENDLE APY, but these rewards will be fully redirected to the mPENDLE Stake Pool on Arbitrum within six months. Additionally, new revenue sources, including Pendle airdrop allocations, have been secured to further enhance mPENDLE’s value proposition.

With these expanded revenue streams supporting mPENDLE, we propose an adjustment to PNP emissions on Arbitrum to align incentives more efficiently. This ensures a sustainable supply of PNP while maintaining the effectiveness of bribing mechanisms.

• Current Emission: 0.005PNP/S
• Proposed Future Emission: 0.003PNP/S

Reducing emissions will effectively decrease the market supply of PNP, strengthening its value support while improving the efficiency of PNP bribing incentives. This approach ensures that bribes remain competitive and that Penpie’s incentive model continues to drive long-term protocol rewards without unnecessary inflation.

Operational Funding Adjustments for Long-Term Sustainability

Ensuring Penpie’s long-term success requires stable operational funding to support critical infrastructure, security, and ongoing development. As the ecosystem grows, consistent reinvestment in technical improvements, security measures, and team expansion is essential to maintain efficiency and innovation.

Currently, Penpie incurs a wide array of recurring operational expenses; below are a few notable examples:

• Ethereum Pool Registrations – Deploying new pools on Ethereum incurs costs, with approximately 2 to 3 new pools launched each week.
• Security Audits – To uphold high security standards, every new feature undergoes at least two audits performed by top-tier blockchain security firms.
• Real-time Monitoring & Infrastructure Maintenance – Continuous investment in security monitoring, cloud services, and server upkeep is required to ensure platform reliability and user protection.
• Ongoing Development & Team Expansion – As Penpie evolves, additional resources are allocated to technical innovation, platform optimization, and expanding the development team. To provide a stable funding model that supports these core expenses, this proposal suggests the following adjustments:

1 - Repurposing the 5% PENDLE LP revenue allocation, originally introduced in PIP #10 for mPENDLE buybacks, to fund essential operational expenses.

2 - Introducing a 5% fee on bribes, creating a dedicated revenue stream to support infrastructure, development, and security needs while reducing reliance on a single income source.

These adjustments will ensure Penpie remains financially resilient, enabling continuous improvements and long-term sustainability while maintaining a well-balanced incentive model for users. All funds generated will be monitored and allocated transparently, prioritizing ecosystem stability and long-term value creation.

Specification

This proposal seeks approval from the community to implement the following changes:

• Convert future Pendle airdrop rewards into PENDLE and distribute them directly to the mPENDLE Staking Pool on Arbitrum.

• Remove the SV mPENDLE Pool and transfer 100% of its PENDLE rewards to the mPENDLE Stake Pool on Arbitrum.

• Reduce PNP emissions on Arbitrum from 0.005PNP/S to 0.003PNP/S.

• Repurpose the 5% PENDLE LP revenue allocation from mPENDLE buybacks to operational expenses.

• Introduce a 5% protocol fee on bribes, creating an additional revenue stream to support long-term sustainability.

Below are the detailed breakdowns of how the revenue distribution will change following the implementation of this proposal: