2024

bullish

Ethena

<p class="is-style-lead">Ethena Labs has announced the launch date of its synthetic USDe stablecoin on Dec. 16, 2024, as the token’s market cap reached $5.73 billion, an all-time high.</p> 
<p>In a post on X, Ethena Labs, built on the Ethereum blockchain, announced a possible launch for its stablecoin USDe which is pegged to the U.S. dollar. It is mainly built as a yield-generating asset rather than an intermediary for a transaction, similar to Tether (<a rel="" href="https://crypto.news/price/tether/">USDT</a>) or USD Coin (<a rel="" href="https://crypto.news/price/usd-coin/">USDC</a>).</p> 
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   <p lang="und" dir="ltr">16.12.2024 <a rel="nofollow" href="https://t.co/zmRQyCFfy9" target="_blank">pic.twitter.com/zmRQyCFfy9</a></p>— Ethena Labs (@ethena_labs) <a href="https://twitter.com/ethena_labs/status/1867131201817125143?ref_src=twsrc%5Etfw" target="_blank" rel="nofollow">December 12, 2024</a>
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  Ethena Labs announcement of USDe stablecoin on X.
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<p>In contrast to the traditional fiat-reserve-backed <a rel="" href="https://crypto.news/usda-bitcoin-backed-stablecoin-is-2nd-largest-cdp/">stablecoins</a>, USDe derives its yield based on the staking rewards of Ethereum (<a rel="" href="https://crypto.news/price/ethereum/">ETH</a>) and keeps that reward away from the short funding rate for ETH. By doing so, it provides the holder an attractive annual percentage yield of up to 29%. This double-layered yield model makes USDe a high-reward financial instrument in the decentralized finance space.</p> 
<p>Users have rapidly flocked to USDe, making it the third-largest USD-pegged stablecoin, overtaking DAI’s $4.7 billion market cap, but is still behind USDT and USDC, which have a market cap of $135 billion and $40 billion, respectively. According to <a href="https://coinmarketcap.com/currencies/ethena-usde/" target="_blank" rel="nofollow">CoinMarketCap</a>, USDe’s trading volume increased by 24.27% in the past 24 hours to reach $171.09 million, indicating high demand for yield-bearing assets.</p> 
<p> You might also like: <a rel="" href="https://crypto.news/bitcoin-exceeds-100k-in-daily-and-weekly-close/"> Bitcoin makes history: Closes above $100K for the first time in daily and weekly records </a> </p> 
<h2 class="wp-block-heading" id="strong-how-sustainable-is-the-usde-stablecoin-model-strong"><strong>How sustainable is the USDe stablecoin model?</strong></h2> 
<p>Ethena’s USDe has been compared to Terra-Luna, whose value also collapsed in 2022 because of its unsustainable growth model, by <a href="https://medium.com/thecapital/ethenas-usde-explained-no-terra-luna-but-major-risks-exist-1ca01e67da86" target="_blank" rel="nofollow">critics</a>. Terra’s <a rel="" href="https://crypto.news/terras-ust-stablecoin-falls-below-the-dollar-tumbling-lunas-price/">collapse</a> was attributed to its struggles to maintain its peg with the U.S dollar in a bearish market, and experts fear USDe could suffer the same fate.</p> 
<p>USDe employs a <a rel="" href="https://crypto.news/ethena-flips-crucial-resistance-as-crypto-fear-and-greed-index-rises/">delta-neutral</a> trading strategy, which balances Bitcoin (<a rel="" href="https://crypto.news/price/bitcoin/">BTC</a>) and ETH long and short positions to maintain its stability and yield. Ethena hedges the long stETH positions on centralized exchanges. In case a CEX goes down, the hedge may sit there;&nbsp; Ethena’s positions open to unrealized profits and losses. In a bull market, since the funding rate stays positive, this technique will work well; however, in bear markets, once the funding rate becomes negative, the yield can go down.&nbsp;</p> 
<p> You might also like: <a rel="" href="https://crypto.news/from-500-to-50000-5-crypto-picks-for-10000-growth-by-2025/"> From $500 to $50,000: 5 crypto picks for 10,000% growth by 2025 </a> </p> 
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   <p lang="en" dir="ltr">Every so often we see something new in this space. I often find myself on the mid curve for an extensive amount of time. I am comfortable here. That being said, there have been events in this industry I wish I was more curious about, there have also been events I definitely did…</p>— Andre Cronje (@AndreCronjeTech) <a href="https://twitter.com/AndreCronjeTech/status/1775398490404724914?ref_src=twsrc%5Etfw" target="_blank" rel="nofollow">April 3, 2024</a>
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  Andre Cronje talks about Margin/Collateral model on X.
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 <p>“<em>So while things are going great now because market is positive and shorting funding rates are positive, eventually that turns, funding becomes negative, margin/collateral gets liquidated, and you have an unbacked asset. The counter to that is “law of large numbers”, which is pretty much the same as UST’s $1bn BTC fund etc. It works until it doesn’t</em>“.<br><br>by Andre Cronje</p> 
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<p>Andre Cronje, the Chief Technology Officer of Fantom Foundation, for example, has highlighted that USDe’s model may only hold in bullish market conditions, and its resilience in a bear market is unproven, drawing parallels to the collapse of Terra-Luna. Secondly, given the growing efficiency of the crypto market, the profit margins, known as the <a rel="" href="https://crypto.news/polymarket-ethena-usde-stablecoin/">basis spread</a>, could narrow, reducing the profitability of USDe’s high yields in the long run.&nbsp;&nbsp;</p> 
<p> Read more: <a rel="" href="https://crypto.news/terra-luna-classic-sends-mixed-signals-as-lunc-burn-rate-grows/"> Terra Luna Classic sends mixed signals as LUNC burn rate grows </a> </p>

Ethena Labs to release its synthetic USDe stablecoin on Dec. 16

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