Tuesday, November 5, 2024

Ethena Stablecoin’s 27% Yield is Triggering Terra-Induced PTSD

The startup’s token, USDe, is backed by staked ETH and ETH quick positions.

Artificial stablecoin startup, Ethena Labs, is elevating eyebrows after asserting it’s going to supply over 20% yield on its USD-pegged token.

Ethena’s Labs’s USDe stablecoin gives a 27% yield, and is accessible for the general public since Feb. 19, when the mainnet and Etherena’s “Shard Marketing campaign” went reside.

In response to the workforce, customers have the selection between staking USDe and receiving yield generated by the protocol from stETH and funding charges from quick ETH positions, or accumulating so-called “shards,” which monitor and reward a consumer relying on how a lot they contributed to the ecosystem. Sharda are obtained by offering liquidity to Curve.

The 20-plus yield on a stablecoin has triggered Crypto Twitter, because the pitch sounds just like Terra’s UST algorithmic stablecoin, which lured traders with a 19% yield. In early Might 2022, UST started to lose its peg, as LUNA, the token backing it, began to drop in worth. The sharp drop in UST collateral prompted a demise spiral which worn out $50 billion in market capitalization over the course of three days. UST’s collapse seared into some crypto traders’ thoughts the previous financial axiom, “there’s no free lunch.”