The Ethena protocol, which issues the synthetic dollar USDe and uses the governance token $ENA, has become a prominent trend in the Decentralized Finance (DeFi) sector. The main trend is its innovative approach to creating a censorship-resistant and scalable stablecoin, unlike traditional fiat-backed stablecoins.
USDe maintains its parity with the dollar through a "delta hedging" strategy, backing the token with crypto assets (like Ethereum) while simultaneously taking short positions in perpetual futures for an equivalent value. This strategy allows it to offer an attractive yield, known as "Internet Bond yield," generated by the funding rates of those futures positions.
The market closely monitors Ethena's ability to scale its capitalization without compromising stability during extreme volatility or a prolonged shift in negative funding rates. The adoption of USDe in the DeFi ecosystem and its integration as collateral in other protocols are key trends. There is an ongoing debate about the sustainability of its yield and counterparty risk due to reliance on centralized cryptocurrency exchanges for short positions. Despite the inherent risks of synthetic and algorithmic assets, the high yield offered drives strong interest and an increase in its trading volume.
