Evaluating Strategic Paths Forward

Penpie 3. Community Ideas
62

The ‘Perpetual’ nature of the lock-up is a liquidity constraint, not a transfer of title. Having sold governance tokens does not grant the protocol the right to re-collateralize principal with volatile equity (PNP).

You claim that demanding a 1:1 refund is “impossible” because the assets are programmatically locked.

Correction: No one is demanding breaking the smart contract lock today. We demand that the accounting integrity of the 1:1 backing remain intact.

A 2-year lock is a temporary restriction, not a license to dilute equity. If the vault contains 100 PENDLE, it should represent 100 mPENDLE, regardless of the release date. Using the lock as an excuse to replace those PENDLE with PNP in a forced 1:1:0’78 merge disregards the “physical attributes”; it is a unilateral write-off of the depositor’s equity.

  1. A Yield Certificate still requires a 1:1 Underlying Backing You state that mPENDLE is a ‘Perpetual Yield Certificate’ and not a ‘demand deposit.’ This is correct regarding liquidity (I cannot withdraw at any time). However, it is fundamentally false regarding solvency.

Even a yield derivative must be anchored to an underlying asset. If I buy a ‘Gold Yield Certificate’ from a bank, the bank cannot decide mid-way that my gold is now 30% ‘Bank Stock’ because the vault is locked.

The ‘Perpetual’ nature of the lock-up was a commitment to the ve-tokenomics model, not a donation of the underlying PENDLE principal to Penpie.

  1. “Governance Arbitrage” Is a Red Herring

You suggest that because users sold their PNP rewards in the past, they have forfeited their right to reclaim their full equity now. This is a dangerous and unprofessional argument.

The reality: PNP was an incentive: a payment for the risk of locking up capital. Selling a reward is a fundamental market right. Suggesting that selling your “check” (PNP) entitles the “employer” (Penpie) to subsequently seize your “savings” (mPENDLE capital) is a violation of the most basic fiduciary principles.

Users cannot be retroactively penalized for participating in the market by devaluing their underlying deposit. Ownership of capital is independent of what a user does with their reward tokens.

PNP incentives were also not distributed regularly, they were not distributed to everyone, nor was the amount equal for every 1 Pendle deposited, giving the depositor 1 mPENDLE + 0.78 PNP.

  1. The “subsidy” fallacy

You claim that PNP holders “subsidized” mPENDLE holders.

The reality: Yield is the cost of capital. Penpie attracted TVL by promising returns. That wasn’t a “subsidy”; it was the business model.

In no other financial sector can a custodian say, “I paid you high interest last year, so this year I’m keeping 30% of your deposit to cover my costs.” If the model favored mPENDLE, it was a flaw in the design of their protocol, not a debt that depositors now owe them

The 1:1:0’78 Merger: A Forced Internal Bailout

By insisting that 1 PENDLE = 1 mPENDLE + 0’78 PNP, they are admitting that the mPENDLE-PENDLE parity is dead and that they are using PNP (a token they print) to “fill the gap” of the PENDLE they are diverting.

This is a forced debt-to-equity conversion. They are turning us into involuntary investors in the PNP token to save the protocol’s balance sheet.

Capital Stack: In any asset restructuring, depositors (mPENDLE) sit at the top of the hierarchy, while equity holders (PNP/vePNP) are at the bottom to absorb losses.

Attempting to force a 1:1:0’78 ratio (mPENDLE + PNP) is a textbook inversion of the capital stack. You are effectively forcing depositors to recapitalize the protocol by converting their senior debt into risk-on equity (PNP). The ‘perpetual’ nature of the lock is strictly liquidity constraint; it does not grant the custodian the right to re-collateralize the principal with its own governance tokens.

We accept the liquidity risk. We never accepted the primary risk (that our PENDLE would be replaced by a different, volatile asset).

Stop portraying our defense of our ownership as “extortion.” Demanding that a custodian return the exact deposited asset (at the end of the lock-up period) is the very definition of a “Perpetual Performance Certificate.” If the underlying asset is altered, you are not managing a protocol; you are executing an asset seizure under the guise of governance.

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63

According to your argument, the locking period for sPendle has been reduced from 2 years to 7 days. What happens if PNP users allocate 100% of the protocol rewards to PNP? I believe there is a significant flaw in your reasoning, which exposes mPendle users to substantial risk.

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Furthermore, I believe the most important factor remains governance consensus; you cannot ignore the sacred spirit of the DAO. If mPendle cannot be merged into a single token this time, I am personally concerned about future risk events. Only a token merger that grants mPendle governance rights can effectively protect our assets in the future.

65

If your defense of PIP #22 is ‘accept this haircut or we will vote to give ourselves 100% of your rewards,’ you are proving that is currently operating in bad faith.

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66

I feel like you are mischaracterizing my argument. I am not advocating for PNP to receive 100% of all rewards; my point is that we need governance rights to eliminate this layer of risk. This opportunity to merge tokens and obtain governance rights is the perfect catalyst. Otherwise, by demanding governance rights without a clear reason, we would be the ones who appear to be acting in bad faith.

67

At least I am personally willing to accept such an execution strategy, as it means we, as mPendle holders, can also benefit from future treasury buybacks and token burns. Furthermore, the risks associated with PRT still exist, and I don’t believe there is a better solution than this proposal. I am currently very concerned that some may exploit community panic for arbitrage.

Would you like me to adjust the tone to be more formal for a governance forum or keep it conversational?

68

Invoking the sacred spirit of the DAO to justify the dilution of depositor principal is a fundamental misunderstanding of decentralized governance.
Governance vs. Property Rights A DAO is a mechanism to manage a protocol, not a tool to override property rights

The Social Contract of Penpie was: I deposit PENDLE, you manage the yield.
There is no ‘spirit of the DAO’ that justifies converting a user’s 1:1 asset backing into a volatile hybrid (mPENDLE + PNP) without their explicit consent.
Voting to change the nature of someone else’s collateral isn’t governance; it is a unilateral contract breach

You argue that only a merger into a single token (giving mPENDLE governance rights) can effectively protect assets. This is a paradox:
You are claiming that to ‘protect’ my PENDLE backing, I must first accept a +50% haircut by being forced into PNP. I do not need governance rights to protect my asset; I need the custodian to honor the backing of the original deposit. Governance rights in a protocol that has already compromised the principal of its users are worth very little.

The Risk of Precedent If we accept that a DAO can vote to merge debt (mPENDLE) with equity (PNP) to solve a liquidity crisis, you are setting a dangerous precedent. It means that in any future risk event, the DAO can simply vote to take another piece of the depositors’ principal to save the governance token. That is the opposite of ‘protection’—it is permanent systemic risk

A legitimate DAO respects the hierarchy of capital. Shareholders (PNP) take the risk; depositors (mPENDLE) are protected by the collateral. By forcing this merger, you are destroying the spirit you claim to defend. If the only way to save Penpie is to seize part of the depositors value, then the protocol is admitting insolvency, not exercising governance

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69

The key point is that we are not depositors like those in Lido ETH; we are investors who utilized Pendle as capital to acquire PNP tokens. The original intent of Pendle Rush was exactly that: contributing Pendle in exchange for governance tokens to manage the entire protocol’s assets, while mP serves as the proof of that initial contribution.

70

You cannot fix a fundamental valuation gap with burns if the protocol’s ability to generate revenue is diminished. If Penpie’s TVL leaves due to a loss of trust, there will be no revenue to fund the buybacks promised
The new capital will go directly to Pendle (sPENDLE), not to a toxic hybrid like OSTR.

They are selling you a democracy where they have the majority of votes and the rules can change tomorrow
Gobernante Risk is not a Solution you are offering governance as a fix for governance risk. That is circular logic. If the protocol can vote to merge debt with equity today, it can vote to change the buyback rules or the burn mechanics etc to favor the team or large protocol holders.

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There is a far more viable and fair technical alternative: transforming mPENDLE into an auto-compounding asset similar to Lido’s wstETH, where the token value increases intrinsically against PENDLE by reinvesting sPENDLE rewards without human intervention. In this model, the PNP token would serve a legitimate function of governance and value capture through management fees on the generated yield just as LDO does

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After reading everyone’s comments, I would like to raise a few points:

  1. First, I am not an AI. While I admit that I have used AI to help structure my arguments and translations, I can guarantee that all the viewpoints expressed are entirely my own; my intent was simply to produce more structured content. Moving forward, I will reduce the reliance on AI and translate directly to express my views.

  2. Regarding whether we can filter for long-term mPENDLE holders and provide them with additional compensation, my answer is that it is not feasible, nor is it reasonable from either an emotional or logical standpoint. First, as a long-term mPENDLE holder, you have already received the yield rights you were entitled to; I cannot see a reason why PNP needs to provide extra subsidies. The current situation hurts not just mPENDLE holders, but both sides of Penpie. Furthermore, simply suggesting to “check the first interaction address with the Penpie mPENDLE staking contract” clearly fails to cover the full definition of a long-term scenario. It seems you simply wish to include yourself, rather than genuinely considering the collective mPENDLE holders. Additionally, in the current situation where “10 people have 11 opinions,” if we try to accommodate every self-proclaimed long-term holder’s criteria, vePENDLE would likely unlock before we finish, which is completely inefficient. Therefore, we should base our discussions on the roles of both parties and aim to simplify the process and the proposal.

  3. To those arguing about redemption: Regrettably, the current situation is a protocol transition, not a liquidation. From the very beginning, the Penpie protocol was launched by raising Pendle from users to operate the protocol, and it was explicitly stated that Pendle could not be withdrawn. Even if redemption were to occur, it would be determined through governance by PNP. This is a limitation that everyone should have understood at the moment of investing in mPENDLE; therefore, there was never a promise that mPENDLE is a 1:1 asset with Pendle. This is entirely market behavior. As for why the proposal does not clearly describe the redemption rules for two years from now, it is because, after in-depth discussion among PNP holders, we believe this should not be decided by the current governance body. Too many variables can change in two years; defining redemption rules now would only invite malicious arbitrage.

  4. For users attempting to frame mPENDLE and PNP as “debt” and “equity” to explain the situation: The current scenario clearly does not fit the traditional financial definitions of debt and equity, but rather represents a variant form of rights and obligations. If we were to strictly apply the theory of debt repayment priority, there would be no need for discussion—we could simply liquidate everything to PRT. In terms of legitimacy, that is what holds contractual validity. However, the context of our current discussion is the hope to negotiate with PRT users and, through this transition, prevent everyone’s current losses from being realized. At the very least, assuming a bullish outlook on Pendle, everyone can still benefit.

  5. To those skeptical about whether OSTR can function properly: I understand your doubts, but this is not an absolute, final proposal; it is put forward for discussion to see if it can be further optimized. We expect that as Pendle transitions, Penpie can also find its own business model in parallel. Therefore, when Pendle decides to adopt a buyback model for its token price, in order to benefit from price appreciation, we have proposed the mNAV token model. Based on buyback data from the past year, we project an annualized return of at least 12%. Furthermore, when mNAV > 1, we can replicate the MicroStrategy (MSTR) convertible bond model to rapidly increase sPENDLE holdings. The most important objective is to merge the two tokens and eliminate the current misalignment of interests.

  6. I hope everyone can discuss this rationally. Please provide constructive suggestions for adjustments rather than using emotional language or merely critiquing the rules, as this is completely unhelpful for advancing the proposal.

  7. I understand that mPENDLE holders believe they are the ones being exploited. However, based on discussions among PNP users, they also view themselves as the sacrificing party. Therefore, the current proposal is not, as you might imagine, completely disregarding the stance of mPENDLE holders; rather, it is the result of multilateral compromise and detailed deliberation. I hope that while mPENDLE holders defend their own rights, they can also consider the rights of the other party, so that we may achieve a win-win situation.

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Let’s stop the gaslighting. Claiming that mPENDLE was never intended to be a 1:1 asset-backed wrapper is a blatant revision of history. If Penpie had marketed mPENDLE from the start as a token that might lose its backing whenever the DAO feels like it, you wouldn’t have a single cent of TVL today. You sold a wrapper; now you are delivering a default.

Your MicroStrategy model comparison is not just flawed—it’s an insult to our intelligence. Michael Saylor uses a multi-billion dollar balance sheet to buy an external, fixed-supply asset (BTC). You are proposing to print a new, undercollateralized token (OSTR/mNAV) to buy an asset you’ve already failed to protect (sPENDLE). That isn’t strategic growth; it’s a textbook Ponzi-style circular trade. You are trying to print your way out of a hole using the depositors’ remaining value as your exit liquidity.

Furthermore, stop pretending PNP holders are sacrificing anything. In any legitimate financial system, equity goes to zero before depositors lose a penny. PNP holders bought a risk-on governance token; mPENDLE holders provided the capital that makes this protocol function. Trying to frame the theft of our principal as a multilateral compromise is pathetic. A win-win where I lose my principal so your governance token doesn’t go sink is not a compromise—it’s an extortion.

If you are so confident in this bullish OSTR model and its projected 12% returns, then make the conversion voluntary If it’s such a great deal, people will flock to it. The fact that you feel the need to force it through a merger proves that you know OSTR is toxic debt that no rational actor would choose over their original PENDLE. We don’t want your rights and obligations or your speculative bond experiments. We want our assets, our 1:1 backing, and the yield they generate. Everything else is just noise to cover up a protocol-level embezzlement of trust.

If you are genuinely looking for a constructive path forward rather than just a way to force a bailout, the solution is technically simple: Transform mPENDLE into a true auto-compounding yield-bearing asset, similar to Lido’s wstETH.

In this model, the mPENDLE token would automatically capture and reinvest 100% of the sPENDLE rewards. This increases the intrinsic value of mPENDLE against PENDLE every single day, creating a mathematical certainty of value growth that would naturally restore the peg through market arbitrage. Under this architecture, PNP would function exactly like LDO does for Lido: a pure governance token that captures value by taking a small management fee from the yield generated.

This is a sustainable, transparent, and proven business model. It aligns everyone’s interests:

  1. mPENDLE holders get their principal protected and their yield maximized without being forced into a toxic merger.
  2. PNP holders get a legitimate revenue stream from a functional service provider instead of being part of a death spiral debt-swap.
  3. The Protocol recovers its reputation by acting as a transparent infrastructure layer rather than a hedge fund gambling with user deposits.

Stop trying to innovate new ways to dilute our assets. If you believe in the future of Penpie, build a model based on yield efficiency and asset integrity, not on forced conversions and undercollateralized tokens. My proposal is simple: protect the 1:1 principal, automate the yield compounding, and let the market, not a biased DAO vote—determine the value of our assets.

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74

So, your ultimate goal is simply to redeem mPendle for Pendle 1:1 to arbitrage from the Penpie protocol.

You are dismissing any arguments you disagree with while completely ignoring the community consensus.

This line of reasoning makes it very difficult for you to gain any support.

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I fail to see whose interests you are actually aligning. You accuse me of manipulation, yet you persist with your debt-equity argument to claim a 1:1 correlation between mPENDLE and PENDLE, without showing any evidence that such a 1:1 backing actually exists. Furthermore, PRT is the real debt here, and you have offered no response to that point. You are the one dodging the real issues.

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Let’s be very clear: demanding that a protocol honors the 1:1 backing of a deposit is not arbitrage it is called holding a custodian accountable. The You are trying to weaponize the word arbitrage to distract from the fact that mPENDLE was marketed as a liquid wrapper for PENDLE. If wanting my original assets back at the value I deposited them is arbitrage, then every bank depositor in the world is an arbitrageur for wanting their money back. The only reason a gap exists to be arbitraged is because the protocol failed to maintain the peg.

Community Consensus vs. Cartel Consensus: You mention ignoring community consensus. A DAO vote to seize 50% of the depositors principal is not consensus—it is a tyranny of the majority. Using a governance vote to violate the property rights of the people who provided the capital is the fastest way to kill the trust in this protocol forever.

I am not here to win a popularity contest with PNP holders who want to use my money to bail themselves out. I am here to advocate for a solvent, honest, and technically sound model. My proposal for an auto-compounding model (Lido-style) actually creates a future for Penpie. Your proposal for a forced merger into a fractional-reserve token (OSTR) is what will ensure no one ever trusts this team with a single PENDLE again.

If you find it difficult to support a model that respects asset integrity and uses proven DeFi mechanics like auto-compounding, then you aren’t looking for a community solution; you are looking for a forced bailout at the expense of the users. I suggest we stop the personal attacks and address why a 50% backed token is somehow better than a transparent, yield-bearing infrastructure.

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77

The evidence for the 1:1 backing is the Penpie documentation itself and the very nature of a ‘liquid version of vePENDLE’. If I deposit 1 PENDLE to mint 1 mPENDLE, the protocol’s sole fiduciary duty is to hold that PENDLE (as vePENDLE) to back the derivative. Claiming now that this 1:1 correlation doesn’t exist is an admission that Penpie has been misleading its users since inception. If it’s not 1:1, then mPENDLE is not a wrapper; it’s a donation.
“Penpie takes all converted PENDLE tokens… to acquire more vePENDLE… to provide enhanced rewards for its depositors.” It does not say: Penpie can use your locked PENDLE to bailout PNP holders or create undercollateralized hybrid tokens.
This is why my proposal for a Lido-style auto-compounding model is the only one that respects your own documentation.

If you move forward with the OSTR merger, you are violating the very core of your technical docs: you are taking the ‘enhanced rewards’ meant for depositors and diverting them to fix a balance sheet hole. The ‘blackhole’ was a promise of yield and backing, not a license for the DAO to expropriate the underlying value.

Regarding PRT being the real debt. This is a diversion. PRT is the result of a security failure (the hack), while the mPENDLE/PENDLE backing is a fundamental structural obligation. You cannot use the existence of one debt (PRT) to justify the expropriation of another asset (mPENDLE). In any professional restructuring, you don’t cancel the backing of one group of users to pay off a different liability.

You ask whose interests I am aligning? The interests of every current and future depositor who expects DeFi protocols to be solvent and honest. My proposal for an auto-compounding, yield-bearing model (Lido-style) aligns:

  1. mPENDLE holders, by finally giving them the value growth their underlying PENDLE is already generating.
  2. The Protocol, by providing a transparent, math-based path to peg restoration that doesn’t rely on printing ‘hopium’ tokens.
  3. PRT holders, because a solvent, functional Penpie with a real business model (management fees) is the only way the protocol will ever generate enough revenue to actually pay back the hack victims.
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78

We are like two parallel lines. You fail to directly cite any documentation to refute my points, nor do you provide any evidence; you simply blindly emphasize how things “should” be. To you, anything that doesn’t align with your worldview is labeled as misleading or a scam. You really ought to understand the rules of the game before expressing your opinions. Since you are convinced that only a 1:1 ratio satisfies your sense of justice, while completely disregarding the protocol’s actual development history and the current context, I see no further basis for us to continue this discussion. I respect your persistence, but I choose to support a proposal that allows the protocol to move forward as quickly as possible. Let’s leave the rest to the DAO vote to decide.

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79

PNP holders OWN this protocol, period. We owe the mPendle holders nothing, nil, zero. Those mPendle arbs tries to steal and have to be punished, just forfeit the Pendle and make it owned by PNP community. Give them nothing lol

80

We have to get into the calculation of this ratio and the actual rewards that Pendle depositors received, because it seems to me that (as illustrated below), there’s an assumption that 0.7837 PNP was provided to Pendle depositors, along with the mPendle and this isn’t true.

While PNP has been distributed through various incentive programs, there is no clear on-chain basis to treat 0.7837 PNP as a reward received per PENDLE deposited to mint mPENDLE.PNP rewards for depositors:

rush 1: 200K
rush 2: 50K
rush 3: 20K
rush 4: 50K
rush 5: 50K
rush 6: 50K
rush 7: 50K
rush 8: 4K

Total: 474K

12,759,676 Pendle was deposited (and there’s the same amount of vePendle and mPendle). Even when we average this out (also not correct accounting for depositors), that means approx. 0.037 PNP per Pendle deposited was given. That’s about 5% of the PNP supply, but the calculation in PIP #22 assumes 100%. That is a substantial discrepancy that needs to be explicitly reconciled with on-chain data before being used as an input to this proposal.

^This needs to be reconciled with the actual rewards received by depositors; including the full circulating PNP supply effectively dilutes Pendle depositors with value they did not receive as part of their deposits. There is no on-chain basis for having received 0.7837 PNP per PENDLE deposited to mint mPENDLE, and treating this figure as something depositors can ‘give back’ reflects a logical mismatch between supply ratios and realized rewards.

Hopefully this example can clarify a bit: Imagine Penpie only managed to get 1M Pendle deposited. Under the proposed split, the depositor would get 10% of the value and PNP the other 90%, simply because they had 10M tokens in circulating supply. That isn’t a realistic capital allocation and would certainly not be fair. Or, imagine the circulating supply was chosen as 10B. Where does the capital come from that gets shifted over to PNP?

To get to the proposed split in PIP#22, one has to assume that upon deposit of Pendle for mPendle, you were also donating the value to the entire supply of PNP, of which only ~5% was provided back to the depositors. A rational investor wouldn’t do this if they understood it, and I don’t think we can call all Pendle depositors simply irrational rather than this being a problem in post-mortem logic.

So, I think we can’t discuss the other moving parts of this (PRT, secondary markets) until we address this issue with the discrepancy in what Pendle depositors actually received in return and what is being assumed, otherwise it’s just allocating value to PNP based on the decision of PNP supply.

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81

You are completely ignoring the IDO, TGE, as well as past emissions and bribes.
This theory of yours is nothing more than a description of misinformation.