The cryptocurrency community is deeply concerned about this alluring income opportunity. Investors in cryptocurrencies expressed their dissatisfaction with Ethena Labs’ recently released stablecoin on X.
According to an X post from the company’s official page, Ethena Labs debuted its USDe stablecoin on the public mainnet on February 19. According to Ethena Labs’ webpage, the USDe Ethereum-based synthetic dollar now offers an annual percentage yield (APY) of 27.6%. This yield is significantly greater than the 20% provided by Anchor Protocol on Terra’s UST prior to the collapse of algorithmic stablecoin issuer Terra in May 2022.
The cryptocurrency community was deeply troubled by the alluring yield opportunity. The true worry, according to anonymous DefiLlama code source 0xngmi, is not Ethena’s high stablecoin yield, but rather a possible yield inversion.
0xngmi noted that Ethena is “completely different” from Anchor Protocol, which he classified as a Ponzi scheme, in a follow-up comment to the discussion.
In a bad market, it will be challenging to sustain such high rates, according to Eitan Katz, co-founder and CEO of the decentralized money transfer protocol Kima. As a result, Ethena may eventually be forced to reduce its dividend. He stated, “[USDe’s] sustainability mostly depends on continuous market growth and the ability to manage risks effectively-and, although it is highly unlikely in the crypto industry, these can provide stability if done right.”
According to its homepage, Ethena has over 4,460 registered users and $297.9 million in total value locked. DefiLama statistics shows that USDe’s market value increased by 20.6% in the last day to $291.93 million.
The founder of The Daily Gwei and angel investor Anthony Sassano stated on X on February 20 that the investor apprehension regarding Ethena’s yield is a positive indication for the cryptocurrency sector.
On February 16, Ethena Labs stated that it has raised $14 million in funding, with support from other investors as well as venture capital firm Dragonfly. In 2023, the company additionally raised $6 million to develop Ethereum-based decentralized finance solutions from Binance Labs, Gemini, Bybit, OKX Ventures, and Deribit.
