📢 Update on V2 Incentive Structure As we prepare for @boros_fi as an addition to the Pendle suite, we will be implementing changes to improve the $PENDLE incentive structure for V2 and introduce minor adjustments to protocol fees. 2025 thus far has been a year of deep building - creating a new protocol from scratch, shipping tons of features for V2 and taking the time to dig into how the dynamics within the Pendle Protocol have evolved. Pendle pools have reached a point where deep liquidity and strong volumes can be sustained with minimal incentives, a clear sign of natural market demand. While some bootstrapping is still needed early on, many pools become self-sustaining once momentum builds. However, as emissions taper, we must ensure that incentives remain effective — an area of our active research alongside ongoing fee optimizations. Once initial testing is completed over the next few weeks, we will be implementing a dynamic incentive cap based on a pool’s swap fee contribution. Pools deployed on Pendle will begin with a high incentive cap to allow room for TVL bootstrapping and will gradually adjust weekly to match its fee contribution to the protocol. The imposed caps are asymmetrical by design: they rise quickly with strong performance but decline more gradually. For pools with fluctuating swap fees, this means caps will typically reflect the higher end of its recent activity, providing stability and encouraging growth without penalizing short-term dips. This cap mechanism prevents pools that are consistent laggards from taking excess amounts of incentives, only being eligible for additional incentives as they gain traction. Currently, the bottom 5% of swap-fee and TVL contributors consume over ~50% of PENDLE emissions — an imbalance we intend to resolve. We expect that these improvements will make the system significantly more efficient and reduce the amount of incentives utilized by the Pendle protocol. Once live, the detailed mechanics on the incentive caps will be available in the docs and the team will continue monitoring the overall protocol performance. In addition, we have seen positive impact with our last adjustment on fees and will adjust the following: 1️⃣Reduction in swap fees from 2% to ~1.3% 2️⃣Increase in YT yield fees from 5 to 7% On net we expect an increase in trading volumes, while the fee on yield remains well below the industry standards of 10-50% set by protocols such as Yearn, Lido, Rocket and Balancer. We expect these settings to remain for the medium term, barring unforeseen circumstances.