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Crypto Community Raises Eyebrows at Ethena USDe's High Yield Promise

Crypto Community Raises Eyebrows at Ethena USDe's High Yield Promise

Key Takeaways

  • Ethena Labs' USDe stablecoin launch has raised concerns due to its high 27.6% APY, drawing parallels to previous high-yield offerings that collapsed.
  • Notable crypto figures are discussing the potential risks associated with high yields, emphasizing the importance of understanding underlying risks and sustainability.
  • Despite skepticism, Ethena's rapid growth and recent funding success highlight continued investor interest and confidence in innovative crypto financial solutions.

Ethena, a decentralized finance (DeFi) platform, has recently launched its USDe tokens, which amassed over $287 million.

The introduction of this stablecoin to the public mainnet on February 19 caused crypto enthusiasts to voice their doubts about the promise of a 27.6% annual percentage yield (APY).

What is FUD in Crypto? (Fear, Uncertainty & Doubt Explained)

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What is FUD in Crypto? (Fear, Uncertainty & Doubt Explained)

What is FUD in Crypto? (Fear, Uncertainty & Doubt Explained) What is FUD in Crypto? (Fear, Uncertainty & Doubt Explained)

Members of the community expressed their concerns about the yield being placed well above what was previously offered by similar models, which ultimately collapsed, leading to losses.

The co-founder of DefiLlama went on X to argue that high yield should not be the main point of concern; in fact, what is more worrying is a potential yield inversion.

Founder of The Daily Gwei, Anthony Sassano, also joined the online discussion to comment on the changing crypto community. He expressed feeling glad that so many people are questioning the high yield, signaling a positive development in people's approach to crypto.

Ethena's research lead, Conor Ryder, responded to critiques optimistically, highlighting the platform's reliance on substantial historical analysis that predicts sustained high demand for Ether shorting, framing negative funding rates as an integral part of Ethena's operational blueprint.

With $20 million allocated from a recent $14 million funding round to an insurance fund, Ryder reassures stakeholders of Ethena's preparedness to navigate the challenges of fluctuating funding rates, aiming to secure the platform's position in the DeFi ecosystem.

Nonetheless, the market cap of USDe has witnessed a substantial rise, underscoring the crypto community's hunger for high-yield opportunities, despite the shadows cast by past stablecoin failures.

Discussions in the crypto community were also buzzing after Joe Biden posted a meme often associated with bullish sentiments in the crypto world.

Aaron S., Editor-In-Chief
Having completed a Master’s degree in Economics, Politics, and Cultures of the East Asia region, Aaron has written scientific papers analyzing the differences between Western and Collective forms of capitalism in the post-World War II era.
With close to a decade of experience in the FinTech industry, Aaron understands all of the biggest issues and struggles that crypto enthusiasts face. He’s a passionate analyst who is concerned with data-driven and fact-based content, as well as that which speaks to both Web3 natives and industry newcomers.
Aaron is the go-to person for everything and anything related to digital currencies. With a huge passion for blockchain & Web3 education, Aaron strives to transform the space as we know it, and make it more approachable to complete beginners.
Aaron has been quoted by multiple established outlets, and is a published author himself. Even during his free time, he enjoys researching the market trends, and looking for the next supernova.

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