Ethena Labs’ USDe stablecoin yield has raised concerns in the crypto community, but founder Guy Young believes these concerns are a sign of a maturing industry. He acknowledges that the collapse of the Terra-LUNA ecosystem has made people more skeptical and cautious about high yields. Young emphasizes the importance of questioning the fragility of protocols in their early stages to avoid potential problems in the future.
The launch of the USDe stablecoin on the public mainnet on February 19 caused widespread concerns due to its 27.6% annual percentage yield (APY). This raised questions about the protocol’s economic sustainability, especially considering the collapse of Anchor Protocol on Terra’s UST, which wiped out billions of dollars in value. Young compares USDe’s yield, which is generated through staking returns and shorting Ether perpetual futures contracts, to Anchor’s artificially inflated yield, which had no sustainable underlying mechanism.
Unlike Anchor Protocol, Ethena Labs’ USDe yield is publicly verifiable and has a clear source. Young emphasizes that Anchor’s yield was “totally made up” and came from venture capital firms rather than actual yield-generation mechanisms. In contrast, USDe offers a dynamic yield that is backed by identifiable sources. This transparency is meant to assure users that there is a genuine mechanism behind the USDe yield.
USDe is not the only product in the market that promises high yields. Pendle Finance’s staking pools, such as the ezETH pool, offer a fixed APY of 41% for staked Ether. This indicates that there is a demand for double-digit yields in the crypto space, and investors are willing to take on the associated risks.
In other news, it has been reported that venture capital firm Andreessen Horowitz (a16z) has invested $100 million in EigenLayer. This investment is significant and may have implications for the development of the EigenLayer project, although further details are not provided in the article.
Ethena Labs’ USDe stablecoin yield has raised concerns within the crypto community, but founder Guy Young sees this as a natural part of the industry’s maturation process. He emphasizes the importance of skepticism and transparency in evaluating the sustainability of protocols offering high yields. The article briefly mentions a large investment by a16z in EigenLayer, but does not provide further details.
Another project promising double-digit yields? It’s starting to sound like a bubble waiting to burst. 🎈
The comparison between USDe and Anchor Protocol sheds light on the importance of sustainable underlying mechanisms. It’s crucial to have a clear source for the high yields being offered. Transparency is key!