Ethena Labs Founder Addresses Concerns on USDe Profitability
Date: 2024-02-23 Author: Dima Zakharov Categories: BUSINESS
Addressing initial concerns about the profitability of Ethena Labs' stablecoin, USDe, in US dollars is seen as a natural sign of a mature industry rebounding from the Terra-LUNA ecosystem crash, said Guy Young, Ethena Labs' founder, on February 22.
Ethena Labs and USDe Stability
The launch of Ethena USD (USDe) stirred widespread unease in the crypto community following its public release on February 19. According to Ethena Labs' website, the synthetic dollar USDe, based on Ethereum, currently offers an annual percentage yield (APY) of 27.6%.
The 27% yield raised concerns about the protocol's economic stability as it was significantly higher than the 20% yield offered by the Anchor protocol for the Terra UST protocol before the issuer of algorithmic stablecoins collapsed in May 2022, wiping out tens of billions of dollars of value within days.
Founder's Perspective
Young from Ethena Labs highlighted that unlike USDe, Anchor's protocol yield was entirely artificial, lacking a sustainable underlying revenue mechanism.
Comparison with Anchor Protocol
Contrary to USDe, Anchor's yield was completely subsidized. It was venture capital firms investing in Anchor and then paying out income that came from nowhere," he said.
Public Validation
Young emphasized that USDe's yield is publicly audited, generated through income staking and perpetual ETH futures contracts.
Expert Opinion
According to Jae Sik Choi, an analyst at Greythorn Capital, Anchor Protocol's artificially inflated yield was unstable, unlike the dynamic yield promised by USDe.
Looking Forward
USDe from Ethena Labs isn't the only product promising double-digit yields. According to Pendle's website, some staking pools on Pendle Finance, such as the ezETH pool, offer a fixed annual percentage yield (APY) of 41% for staked Ether.
