Unlock the potential of staked Ethereum. - by Thade
Ethena first caught my eye when I saw Arthur Hayes discreetly tweet about them. The tweet (which I think has now been deleted) lead his followers to Ethena’s first tweet of an intriguing video. This video essentially teased an ETH/LST backed stablecoin, an internet financial system, and the “internet bond.”
No info on if they’ll have a token yet, but I’m 100% sure there will be one. Their token will obviously fit the LSDfi narrative that doesn’t seem like it’ll be slowing down any time soon. Besides that, I’m hoping there will be revenue share for staking/locking which should also drive the price.
LSDfi is being dominated by ETH & LST backed stablecoins.
And there isn’t any shortage of new protocols launching with their own stablecoin wanting to take a piece of the pie. Some others that on the way are PrismaFi, Lucid Finance, Seneca, and probably many more that I’m missing. Another one that is highly anticipated is Redacted Cartel’s $DINERO.
Ethena looks to launch their own stablecoin - USDe, internet bonds, and money markets.
Let’s start with USDe
Delta-neutral stablecoin with embedded yield.
USDe will be minted when users deposit USD, $ETH, or liquid staking tokens (LSTs). USDe is fully backed by USD/ETH/LSTs and maintains it’s peg to USD by utilizing perpetual swaps to hedge against ETH price exposure. Since USDe maintains it’s peg through delta-neutral hedging, it is 100% collateralized and doesn’t require overcollateralization. USDe will earn yield from stETH and “harvesting futures premiums.”
Per their website:
Ethena takes collateral and distributes to secure onchain custodial wallets, and a corresponding short position is taken for delta-neutral collateralization.USDe generates an embedded yield to users through staked Ethereum returns as well as capturing the basis in ETH perpetual funding rates.
This yield generated via staked Ethereum returns and harvesting futures premium is accrued to the user unlike centralized stablecoins.
The internet bond
Globally accessible floating & fixed rate USD-denominated bonds.
I’m not going to sit here and pretend I know a thing about bonds so I’ll leave this here from their website:
Utilizing either expiring futures, or perpetual swaps, a wide variety of fixed vs floating rate bond exposures can be created, and as a result, the first crypto yield curve.
To put it simply, buy bonds on-chain that earn yield from stETH, and the basis in futures markets.
Ethena Money Markets
Capital efficient money markets on stETH and USDe collateral to allow for both enhanced yield and composable leverage across DeFi.
Borrow USDe by collateralizing stETH, USDe, and potentially other LSTs. There will also be leverage involved so we’ll be able to borrow and loop like a degen.
Backers and investors of Ethena Labs
Other than what is on the landing page of their website, there isn’t any other information. They haven’t released their docs yet but looking forward to checking them out. Be sure to keep up-to-date with Ethena, I think they’ll be a major player in the LSDfi stablecoin meta.
New thread announces their seed round and some info about their protocol.
