Crypto Blog
The stablecoin initiative USDe by Ethena Labs has seen notable adoption, with its market cap surging by over 40% in the last week and by 400% in the last month, reaching $840 million. Following the setback of the Terra ecosystem’s downfall, concerns have been raised within the community about the launch of USDe.
The launch sparked apprehension among investors due to the Ethereum-based synthetic dollar offering a 27.6% annual percentage yield , surpassing the 20% yield provided by Anchor Protocol on Terra’s UST prior to thepost, the BitMEX founder explained that Ethena utilizes two assets to generate yield: ETH staking yield and positive perp swap funding. This combination is responsible for generating the yield of USDe, which is independent of the value of Ethena’s governance token.
In the event that these CEXs are unable to fulfill their obligations, such as paying out profits on swap positions or returning deposited collateral, Ethena could incur capital losses. To address this risk, Ethena employs third-party custodians, which is similar to how Tether’s counterparty risk lies with TradFi banks.
They are highly profitable entities within the crypto industry and are motivated to sustain this profitability. As Ethena expands, the open interest in derivatives grows, increasing fee income for CEXs, thereby aligning incentives for mutual success.
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