A Brief Analysis of ena
The founder of the ena project is very good at choosing tracks, and stablecoin is a super big track.
In the cryptocurrency world, stablecoins and public chains are all super large projects. If they are successful, the profits will be unlimited and the ceiling is high enough.
This kind of super large project is actually like building cars or opening a bank in real life, and it is very difficult.
You see, USDT makes billions every year, and part of the money is used to buy Bitcoin. Others exchange USD for their USDT, but they buy USD into government bonds or deposit them in banks, and live a comfortable life with the interest rate hike. You think 5% is too little, because you have little money. They have become the first stable currency, and their financial management income is better than most companies. Moreover, there may be only a few people working in the company, so the labor cost is extremely low. This is the ultimate efficiency of the blockchain world.
The stablecoin project is very volatile and very popular, but once it is done, the prospects will be very bright, such as USDT, USDC, FDUSD, TUSD, DAI, BUSD, and USDT.
The UST issued by Luna was also a stable currency, but it collapsed due to mechanism problems.
Is there enough innovation in the ena project? I looked at it and basically found no innovation.
Its business logic is very simple, which is to use the high interest of usde to attract you to deposit usdt usdc in exchange for their usde, and then give you the ena token, which is interest. You can sell it with this interest, or you can choose not to sell it. They will exchange the usdt usdc they get into eth and then pledge it for seth to earn 3.5% interest. The other half of eth is a short contract. If seth falls, the short order offsets the loss of the spot price. If seth rises, it offsets the loss of the contract. The contract can also eat the funding rate. The funding rate of eth can eat 10-20% a year. Assuming that one day the market value of usde reaches 5 billion US dollars,
Then the return of 2.5 billion USD of ETH short position is 10%-20%, that is, the return of 250 million USD-500 million USD, and the return is 3.5% of SETH, that is, 87.5 million USD. So their staking return of 35% is definitely not sustainable. But in order to promote this coin. Assuming that the price of ena should be as high as possible, if the price of ena is 0.5, then the staking return is 25%, if it is 1, then the staking return is 50%. In order to attract people and eat up the market share of stablecoins in the bull market, I personally judge that the ena coin must be kept stable at least not lower than 0.5. If it is lower than 0.5, it is basically useless. In the bull market, most people will not look at projects with returns below 25%. Keep 1 and strive for 2, then this project has the possibility of going viral.
Is there any risk in the project? I think there is. After all, contracts are added, such as human errors in hedging operations, such as wanting to play a bit during the hedging process to make a profit from the contract, such as the exchange running away. Because it is human operation, people will definitely make mistakes. Just like you deposit US dollars to exchange for USDT, they will invest a small part of the money in other assets. So are there any risks in other assets? There is also a risk when adding a link. Just like you, you clearly want to hoard big cakes, you enter the market and see that other things have risen 10 times, otherwise you will rush in with this dog first, but you will lose money in the rush. This is the risk of human nature. If the benefits are tempting enough, people will be fooled.
In general, this is a project without any innovation, but it must be benchmarked against MKR. ENA can still rise by about 2.5 times based on the current basis. He wants to challenge USDT and USDC through this mechanism. At present, I think it is not realistic. At present, it is destined to only have a very small market share like DAI, 4-5 billion US dollars is enough for their project party to make a fortune, which is better than many projects.
When the mechanisms are similar, there won't be too many miracles. If you hoard coins, others will also hoard coins. It is normal for you to earn 1-3 times more than others through arbitrage, but it is unreasonable to earn 10 times more.
Please believe me, everything I said is wrong.
I have finished writing, keep it up. I am a masseur in Circle B, an old investor who sincerely wishes you to get rich in the cryptocurrency world.
