On February 16, 2024, Ethena Labs successfully raised $14 million in capital at Strategic Round with the appearance of Dragonfly Capital,. Binance Labs, Paypal and Fidelity….

Recently, Ethena Labs announced the opening of a new USDe deposit pool with a maximum limit of $50 million and announced that it will airdrop ENA tokens to users on April 2.

So what is Ethena? What are the potential projects?

Let's find out through the article below!

What is Ethereum?

Ethena Labs is a decentralized stablecoin issuance protocol project built on the Ethereum platform.

The project focuses on providing a stablecoin solution that does not depend on the traditional banking system, accompanied by a USD saving tool called Internet Bond. Ethena's stablecoin (USDe) uses a delta-hedging strategy and is fully transparently collateralized on-chain, allowing for free use across DeFi applications.

Internet Bond, developed on USDe, combines profits from Liquid Staking Token (LST), futures markets and perpetual swaps. This product is the first bond on the chain that can act as a USD saving tool for global users.

What is Delta-Hedging?

Delta-Hedging or Delta Neutral Trading Strategy, is a trading strategy used to generate income in markets without a clear trend. Despite its definition, in reality there are many different methods to apply, with the common goal of eliminating price fluctuations and profiting from it.

This method keeps the user's position constant when the market experiences volatility. In the context of the cryptocurrency market, the main method is to adjust the total investment portfolio of the user to zero, create an insurance and take advantage of various opportunities such as IDO, Airdrop, Staking, Farming to achieve profit.

Outstanding features of Ethena

Popular stable assets in the cryptocurrency market are often easily affected when financial institutions encounter problems, especially the risk of depeg of stablecoins such as USDC, USDT,...

Ethena introduces USDe as a solution to solve these problems. This Stablecoin is developed with the following features:

  • Scalability through the use of derivatives without the need for overcollateralization, as LST used as collateral can be hedged with an equivalent short position.

  • Ensure stability through taking unleveraged short positions on LST as soon as USDe is released, ensuring position neutrality.

  • Resist censorship by separating collateral from the banking system and storing collateral in decentralized platforms that can be easily audited on-chain.

Highlights of USDe

USDe issuance mechanism

Users can deposit Liquid Staking Tokens (LST) such as stETH, rETH into Ethena in exchange for USDe. During this process, inflation and execution fees will be charged to users' mint or redeem USDe transactions.

After receiving LST from the user, Ethena will open a non-leveraged short order on derivatives exchanges with a value equivalent to the amount of assets the user has deposited into the protocol.

Protect against price fluctuations with a balanced Short position

When talking about algorithmic stablecoins, surely you cannot help but remember the collapse of the Terra LUNA network when the UST stablecoin depeg showed high fluctuations in the market. Ethena has improved from the above lesson using LSTs as the main collateral.

LSTs (stETH, rETH, WBETH) are used as collateral to mint USDe. However, LST are highly volatile altcoins, so Ethena needs to open a short position to hedge against price fluctuations for this asset.

If the value of LSTs in the market drops sharply, the profit from the unleveraged short position will offset the decrease in the price of these LSTs, ensuring their value does not change.

Security elements on the USDe chain

Ethena uses a collateral distribution mechanism through a series of diverse on-chain MPC custody contracts. This ensures that collateral deposits do not rely on centralized servers, thereby minimizing counterparty risk.

Additionally, seamless connectivity to major liquidity venues helps manage underlying risk and optimize capital, while users retain full custody of USDe.

Unlock flexible leverage

USDe generates fixed profits for users through staking rewards from LST and funding rate of short positions. Ethena also continues to allow USDe mints based on LSTs to maintain long-term exposure to Ethereum and at the same time create liquidity for USDe.

Finally, USDe does not have the same liquidation risk as other stablecoins because it is issued based on a delta-neutral mechanism, not using a debt position (CDP) mechanism, helping to avoid this risk.

Information about project tokens 

Token Metrics

  • Token name: Ethena Token

  • Ticker: ENA

  • Blockchain: Ethereum

  • Token Standard: ERC-20

  • Contract: Updating…

  • Token Type: Utility, Governance

  • Total Supply: 15,000,000,000 ENA

  • Initial Supply: 1,425,000,000 ENA

Allocation of tokens

  • Core Contributors: 30%

  • Investors: 25%

  • Foundation: 15%

  • Ecosystem: 30%

Token payment schedule

Token utility

ENA will be used to vote on governance proposals on issues related to the ETH protocol, some of which will be key measures of the protocol's operation, such as:

  • General risk management framework

  • USDe support

  • Community grants

  • Support for new products

Roadmap 

Updating….

Project team

Ethena's core members have extensive experience in traditional finance and crypto-engineering such as…


Investors and partners

Ethena Labs investment rounds are led by DragonFly Capital, Binance Labs,…




On February 16, 2024, the project successfully raised $14M in capital at Strategic Round with the appearance of Paypal and Fidelity....



Frequently asked questions

What is the project's official information channel?

  • Website

  • Twitter

  • Discord

What is the sUSDe token used for?

  • After receiving USDe, users can stake this stablecoin to receive sUSDe. User profits from sUSDe come from the staking reward of LSTs and the funding rate of short positions. sUSDe is a token that accumulates value, does not require any additional user action, and will increase in value over time.

summary

Allinstation answered your question about what Ethena is and provided information surrounding the project. Let's learn and evaluate together to make the wisest investment decisions. Wish you luck!!!

Please note that this is not investment advice.