Launched Apr 2, 2024 · 2 years 5 months ago
Ethena is the protocol behind USDe, a 'synthetic dollar' that aims to hold a stable value of around one dollar without relying on cash sitting in a bank. Instead of fiat reserves, it stays balanced using a delta-neutral strategy: it holds crypto collateral and simultaneously opens offsetting short positions, so price moves on one side cancel out the other. Users who hold the staked version (sUSDe) can earn a yield that Ethena markets as a kind of 'internet bond,' generated from staking rewards and funding rates in the derivatives market.
This design let Ethena grow extremely fast and become one of the most talked-about dollar alternatives in DeFi. The ENA token governs the protocol and its risk parameters. It is important to understand the risks: the yield depends on market funding rates that can turn negative, and the model relies on exchanges and custody arrangements, so USDe behaves differently from a fully fiat-backed stablecoin.
For newcomers, Ethena is best understood as an innovative but more complex, market-dependent take on a stable digital dollar.
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Join the CollectiveDisclaimer: The information on this platform is for informational purposes only and does not constitute financial, investment, or trading advice. Always do your own research (DYOR) before making any investment decisions. Cryptocurrency investments carry significant risk of loss.
