I remember when I studied the ENA project in depth before, I was amazed by its uniqueness. This currency is simply a “two-sided edge” with significant polarization characteristics.
In fact, the way to make money is very simple, that is, relying on arbitrage to eat up the funding level and make a lot of money easily. There is a magic mechanism in perpetual contracts, namely the contract price must match the spot price.
If more people buy then the buyers have to pay the sellers, conversely if there are more sellers then the sellers have to give money to the buyers. ENA cleverly took advantage of this, for example buying 100 ETH and then immediately opening a short order of 100 ETH to hedge, ensuring profit without loss.
This way, no matter how market conditions change, the funds they invest will remain stable. As long as the market cost of capital is positive, they can sit back and make money. They have mastered this model, and the scale is getting bigger and bigger. You may not be able to operate it yourself, but if you give them money, everything will be under control.
Compared with traditional arbitrage, ENA also has innovative measures, such as the introduction of stETH and buffer period mechanisms, and the risks are much lower than projects like $luna. But don't forget, everything remains true to its roots, and we must understand its essence.
After understanding this economic model, the next step is simple. When the Ethereum market was booming, the funding rate soared, ENA's arbitrage mechanism made huge profits, and the currency price soared into the sky like a rocket.
However once the market cools down and funding rates fall or become negative, even though ENA will lose blood temporarily, don't worry, a death spiral will only occur in a long-term bear market. In a bull market, funding rates are mostly positive, and ENA makes money most of the time.
