After the collapse of Terra, interest in decentralized stablecoins has waned, and innovations have emerged in the LSD/CDP field. Maker and Curve TVL remain unchanged. Whether USDe can maintain 27% APY is questionable. EthenaLabs uses LST to create a digital currency pegged to the US dollar, triggering future impacts on Ethereum Layer 1 and Layer 2 or LUNA. Stablecoins are key players in the decentralized currency market, with huge on-chain transactions. AllianceBernstein predicts that the stablecoin market will grow significantly. USDe aims to provide censorship-resistant, scalable and stable financial solutions. EthenaLabs plans to launch "Internet Bond" to match USDe. #UNI #ACE #BTC #XVG #ETH
EthenaLabs' USDe adopts stETH and its inherent returns and ETH short position balance Delta strategy, allowing the protocol to synthetically create Delta-neutral CDPs, combining stETH spot with corresponding short positions.
Holding Ethena's sUSDe for basis trading provides users with approximately 27% yield differential exposure.
USDe Risks:
Custody risk: EthenaLabs uses over-the-counter settlement (OES) for asset custody, which relies on operational capabilities.
Mitigation strategy: Reduce risk by decentralizing hosting among multiple OES.
CEX risk: The protocol uses derivatives on CEX to balance collateral, and the sudden unavailability of the exchange will bring risks.
Mitigation strategy: Reduce the risk of a single exchange failing by having faith in the exchanges that hold the asset.
Collateral risk: The difference between the pledged asset (stETH) and the underlying asset (ETH) may lead to collateral risk. LST errors may cause liquidity problems.
Mitigation strategy: EthenaLabs closely monitors stETH on-chain defects, maintains contact with liquidity sources, and replaces collateral when necessary.
Xiamen Risk: In short positions, the custodian stETH introduces RMB risk if the price gap between ETH and stETH widens.
Mitigation strategies: Systematic collateral management, including rebalancing, transferring assets, and insurance funds.
1. Asset transfer and circular pledge: Ethena can dispatch collateral between exchanges to deal with different situations.
2. Insurance Fund Configuration: Ethena can quickly deploy insurance funds to provide support for exchanges to hedge their positions.
3. Protect the value of angel items: When there are defects in smart contracts, Ethereum takes measures to reduce risks and pays attention to closing hedging derivative positions and asset conversions.
4. Funding risk: Negative funding rates may reduce Ethena’s returns. As a return protector, the insurance fund provides support when the comprehensive return is negative to ensure the stability of collateral.
5. Borrowers jointly eliminate risks: ETH may have a long queue and have a negative impact on stETH. It mainly depends on the performance of stETH and Lido, and EthenaLabs has no direct strategy.
6. USDT, USDC and DeFi regulatory issues: May affect USDe growth, including attracting and retaining users. EthenaLabs operates based on the EU MiCA to reduce the impact of legal fluctuations.
7. Company management risk: providing confidence, monitoring and planning for protocol users.
8. Comparison between Anchor and USDe: Further research is encouraged. Anchor’s decline is related to UST design risk and relies on Luna price fluctuations. USDe is more transparent, has no promise of high returns, and is safer.
9. USDe products are in high demand: attracting a large amount of TVL and investor attention, aiming to lead the next billion-dollar TVL growth in the DeFi field, which may open up new opportunities. It triggers thinking: Does this mark the beginning of a new stage of change in financial centralization?
