Efe Nail Saltık 
Ethena Labs’ USDe stablecoin has sparked debates among crypto enthusiasts, reminiscent of the Terra ecosystem’s tumultuous past, with opinions split on its high-yield proposition.
CEO of Folkvang, Mike van Rossum, expressed caution about Ethena‘s yield-generation strategy, noting, “A lot of things can go wrong.”
The USDe stablecoin offers a yield mechanism through a tokenized cash-and-carry trade, but it faces challenges such as counterparty risk and potential funding rate reversals.
Guy Young, the founder of Ethena, dismissed comparisons to Terra’s failed UST as a “weak, surface-level argument.”
Since its public introduction in February, Ethena Labs has seen a surge in interest, with its total value locked (TVL) skyrocketing from $178 million to $2.3 billion in just 60 days. However, the allure of a high annualized yield of around 37% raises concerns, reminiscent of the situation with Terra’s UST before its collapse.
Unlike traditional stablecoins like USDT and USDC, which are backed by assets like dollars or government debt, USDe positions itself as a synthetic stablecoin. Its value of $1 is maintained through a financial technique called the cash-and-carry trade, a method well-known in finance circles.
Mike van Rossum emphasized the safety of the trade itself but cautioned about potential risks associated with exchange issues and executing large trades in volatile markets.
Ethena Labs’ USDe stablecoin continues to draw attention, but the community remains divided over its high-yield strategy and the echoes of Terra’s past troubles.
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