The dongle has 120,000 followers. Thank you all for your company over the past three years! I once made enough money from airdrops that I could brag about for a lifetime, and later because of chain games, I was able to rent an entire floor of an office building and warehouse as a computer room, but these things don’t seem to have much to do with us fans.
So I have been thinking about what I can provide to my fans, so that everyone can get the wealth they want in Web3 through my content over the past year or so. I think as an account with 120,000 fans, I should bear some responsibilities of a public account, that is, the discussion of "giving a man a fish is not as good as teaching him how to fish". So since 24 years ago, I have been intentionally adding in-depth research to my tutorials, so that everyone can master the methods of catching big fish and gradually identify high-quality projects by themselves.
Sharing today, Ethena, a stablecoin project that has been listed on Binance Launchpool, let’s take a look at whether we are participating in IEO, secondary market or airdrop, how can we plan our own funds based on the nature of the project to obtain the benefits we want.
This article mainly includes the following contents:
Current Stablecoin Track Landscape
What problems does Ethena solve?
Token price analysis
Latest airdrop tutorial
1. Current Stablecoin Landscape
(1) Current Stablecoin Market
As long as you are involved in the Web3 industry, you cannot do without stablecoins. It can be said that stablecoins are the most important tool in cryptocurrency.
In major centralized and decentralized exchanges, whether it is spot or futures markets, the main trading pairs are denominated in stablecoins. More than 90% of order book transactions and more than 70% of on-chain settlements are denominated in stablecoins. .
Stablecoins have settled over $12 trillion on-chain, constitute two of the top 5 assets within the space, account for over 40% of the total value locked (TVL) in DeFi, and are by far the most widely used asset in the decentralized money market.
Stablecoins are not only the foundation of the entire industry, but they are arguably the only assets that can:
(i) Find a truly global product market with over 100 million users;
(ii) the largest potential market;
(iii) Largest addressable market, revenue generation potential.
This is the original words of #Ethena . In one sentence, it can be summarized as follows: No matter how the Web3 industry develops, project parties and users must realize their profits, and realization cannot be achieved without stable coins. This is closely related to all Web3 users. Therefore, stablecoins are a market with more than 100 million users and are also an important revenue-generating market.
Therefore, starting from 2013, all bull and bear changes are inseparable from the stablecoin narrative. According to their nature, stablecoins currently have the following directions:
1. Centralized stablecoins, such as USDT, USDC, etc., are the most widely covered stablecoins.
2. Super-collateralized stablecoin;
3. Algorithmic stable currency;
4. Early stage zero-risk synthetic dollar
All of the above have more or less disadvantages, but we have no better choice, so we just make do with it.
(2) Problems with current stablecoins
Reference: "Solving the Trilemma of Stablecoins"
Take Ether (USDT), the most widely used currency, as an example. It mainly suffers from regulatory scrutiny, high dependence on the existing banking system, and risks of internalized decoupling of returns to users (the other three stablecoins also have various problems).
This may seem a bit abstract to understand, but we can think of it this way:
1. Have you received any share from Tether by holding USDT?
2. If Tether is banned by the Bank of America overnight, will the USDT in your hand turn into a string of codes?
Regarding the first item, we may have never considered it, because in the real world we hold US dollars, the Federal Reserve does not pay us dividends or profits, so to be fair, users of any currency generally do not share seigniorage. Wait for the income, but definitely enjoy its losses.
Therefore, holders of USDT should not expect to receive any NIM of Tether, however, one user group that should be compensated are cryptocurrency exchanges.
Are you worried? Are centralized stablecoins such as USDT and USDC not in line with the revenue sharing nature of Web3?
So if you want to surpass Tether, you have to pay most of your NIM to stablecoin holders and sell cheap governance tokens to exchanges?
#ethena_labs did exactly what this script said: SDe holders can stake directly on Ethena and get most of the NIM. This script immediately attracted big players from all sides to join the market, and major exchanges invested in Ethena in early financing. Ethena has Binance Labs, Bybit via Mirana, OKX Ventures, Deribit, Gemini and Kraken as exchange partner investors.
2. What problems does Ethena solve?
(1) Introduction to Ethena
According to the official statement, Ethena Labs’ current main product is the “Delta Neutral” stablecoin USDe. The creative inspiration for this product came from an article Dust on Crust by Arthur Hayes, the founder of BitMEX.
Ethena is a synthetic U.S. dollar protocol built on Ethereum that will provide a crypto-native solution for currencies that do not rely on traditional banking system infrastructure, as well as globally accessible U.S. dollar-denominated savings instruments — “internet bonds.” Ethena’s synthetic U.S. dollar USDe will provide the first censorship-resistant, scalable, and stable cryptocurrency-native solution for funding enabled by delta-hedged Ethereum collateral. USDe will be fully transparently supported on-chain and freely composed throughout DeFi.
Okay, it’s another book from heaven. I know every word, but I don’t know what he’s talking about. 🤣
It can be understood this way: Ethena's mechanism is like a seesaw, and its stable currency is called USDe. If the price of ETH is 1 US dollar, when 1 USDe is minted, the system will entrust 1 ETH to a derivatives exchange to short 1 ETH;
When the price of ETH drops from 1 USD to 0.1 USD, the short contract value is 10 ETH*0.1 USD and is still 1 USD;
If the price of $ETH rises from US$1 to US$100, its short contract value of 0.01ETH*100 US$ will still be US$1. The balance of the seesaw is achieved through contract hedging, and ultimately a native decentralized equal-mortgage system is created. Synthetic U.S. Dollars.
Based on the above content, the key information about Ethena is extracted:
1. Internet bonds
2. Delta neutral
3. Yield
So we can see the problem Ethena solves:
(2) Problems solved by Ethena
In decentralized stable currencies, collateral is required, and the role of these collaterals is to support the value of the stable currency. Whether it is MakerDAO's DAI, Curve's crvUSD or Aave's GHO, no matter what the mechanism is, its essence is: mortgage assets to release purchasing power, and the more essential thing is to increase leverage.
In order for a stablecoin to be "safe," the collateral price needs to be much higher than the stablecoin itself (overcollateralized). The advantage of this is that as long as the market doesn't plummet, it can be liquidated in an orderly manner (this worked until events like 2008, the subprime mortgage crisis was a painful lesson for TradFi). The downside is that this approach is very capital inefficient, as much more capital is locked up than can be released using stablecoins, and it also relies on the underlying need for leverage.
What’s different about Ethena?
The pattern here is to attempt to remove price instability from the underlying cryptocurrency collateral by taking a long position in ETH and a short position in the ETH perpetual contract. Therefore, every price movement of ETH is hedged.
Ethena created USDe, a stablecoin that always maintains a 1:1 exchange ratio with the U.S. dollar. USDe will become a censorship-resistant, scalable base asset for use in DeFi applications. Since it combines the staking returns of Ethereum with the returns of the futures market, anyone can earn USD-denominated returns through it, as well as Let it become an "Internet bond" like the U.S. Treasury bond in the Internet and be widely used as a basic asset in DeFi. Different bonds can also be created according to different hedging strategies. For example, if you use perpetual contracts for hedging, you can create floating-rate bonds; if you use delivery contracts for hedging, you can create fixed-rate bonds.
Although the DSR (DAI deposit interest rate) of Ethena and MakerDAO can both generate income for users, the difference between the two is that MakerDAO's income comes from the interest generated by U.S. debt and minting DAI, which depends on the U.S. monetary policy; while the income of Ethena Internet Bonds It comes from the pledge income generated by the underlying ETH and the capital fees generated by shorting ETH.
(3) Ethena yield
As mentioned above, USDT holders should not expect to receive any Tether NIM, only exchanges can be compensated in stablecoins.
However, it is profitable for Ethena users to pledge ETH to obtain USDe. This is due to the upgrade of Ethereum Shanghai, ETH has become a crypto-treasury bill, and bonds mainly issued by Ethereum are equivalent to treasury bonds.
USDe staking users can share two benefits from mortgage assets:
The first is the stable income from spot long pledge. Ethena Labs supports staking spot ETH through liquidity staking derivative protocols such as Lido, thereby earning an annualized return of 3% to 5%.
The second is the unstable income from the short futures funding rate. Users familiar with the contract understand the concept of funding rate. Although funding rate is an unstable factor, for short positions, the funding rate is positive most of the time in the long run, which also means that the overall income will be positive.
The combination of the two returns achieves a substantial yield for USDe. Official data shows that the Ethena Labs protocol yield rate and the yield rate of sUSDe (USDe pledged certificate token) have performed quite amazingly in the past two months. The highest protocol yield rate once touched 58.9% and the lowest rate was 10.99%; the highest rate of sUSDe once hit 58.9%. 87.55%, the lowest is 17.43%.
Currently, the real-time rate of return of sUSDe is 35%. Don’t have any idea about 35%. When MakerDAO used RWA to achieve an 8% rate of return, the market went crazy.
(4) Risks
There are many LSD stablecoins. You can refer to this article "Opportunities and Limitations of LSD-Supported Stablecoins"
Ethena is not the only one with a similar use case of issuing stablecoins by delta hedging the underlying assets. The UXD Protocol on Solana does the same thing.
To sum it up: users mint UXD, a stablecoin of equal value, at market price through SOL, and UXD Protocol hedges the price fluctuations of SOL through short selling. At any time, UXD holders can redeem UXD for SOL of equal value in collateral.
Unfortunately, UXD Protocol was born at the wrong time. The market was in a bear market at the time, and UXD was completely hedged on the chain. When the issuance of stablecoins reached a certain scale, the project needed to carry out a large number of short-selling operations, but the users at that time cherished their chips and did not have such a large amount, which led to a negative funding rate and generated a lot of additional costs.
Another point is that UXD used the leverage protocol Mango on Solana for short selling, but Mango was attacked on the chain. Isn’t it tragic?
So the official himself said that he has 5 risks:
https://ethena-labs.gitbook.io/ethena-labs/solution-overview/risks
You can look at the risks yourself. Now that we are in a bull market, let’s take a look at the estimated price of the token.
3. Token Price Analysis
Ethena’s Token Model
$ENA is Ethena's native utility token, mainly used for governance. ENA token holders can vote on protocol governance decisions. #ENA
Token Name: Ethena ($ENA)
Initial circulation: 1,425,000,000 $ENA (9.5% of the maximum supply of the token)
Maximum Token Supply: 15,000,000,000 $ENA
Binance Launchpool Allocation: 300,000,000 $ENA (2% of maximum token supply)
Binance Launchpool link:
https://launchpad.binance.com/zh-CN/launchpool/ENA_BNB
Online price estimate
$ENA Binance opening time: 16:00 on April 2, 2024
According to the calculation of the previous BNB pool, the average annualized rate of return of the first ten periods is 123%. Assuming that the annualized rate of return of this mining is also 123%, and calculated based on 3 days of mining, the price of the token is 0.45 USDT; based on the AI's minimum rate of return of 0.18%, the guaranteed price is 0.18 USDT.
Calculated based on a reasonable price, Ethena’s initial circulation market value is US$641 million and FDV is US$6.75 billion;
Calculated based on the guaranteed price, Ethena’s initial circulation market value is US$256 million and FDV is US$2.7 billion.
The pre-market over-the-counter market gave a higher price of about 0.675 USDT, corresponding to an FDV of up to US$1.012 billion.
Taking into account the context, the reasonable price range of Ethena ($ENA) tokens is between 0.2-0.5, and there may be a good rise like ETHFI in the future.
4. About airdrops
Ethena officials stated that up to 30% of the airdrop allocation will be reserved for users, with 5% designated for the first phase, and the standards for the second phase will be announced later.
The first phase of the airdrop activity has ended;
Season 2 begins April 2
https://mirror.xyz/0xF99d0E4E3435cc9C9868D1C6274DfaB3e2721341/uCBp9VeuLWs-ul1b6AOUAoMg5HBB_iizMIi-11N6nT8
The airdrop interaction steps are as follows (starting on April 2)
Log in to Ethena official website
Link your wallet to complete these tasks
If you are on subsistence allowance, you must prepare at least 100 USDT in ETH and 30-40 U of ETH handling fees.
How to earn Shards:
Hold USDe and automatically receive 5 times the shards every day
Lock USDe in liquidity and get 10 times the shards every day (currently capped at 200M). The more USDe you lock, the more shards you earn each day.
Use the USDC-USDe pair, provide liquidity on Curve (no staking required), then return to Ethena to lock up the pool and earn 20x shards.
IMPORTANT NOTE: It takes 21 days to withdraw from locked funds!
That’s all for today.
