Understanding the Hype Around Ethena USDe’s 27% Yield Promise After Mainnet Launch

The Concerns Surrounding Ethena Labs’ High Stablecoin Yield in the Web 3.0 Era

As of Feb. 20 at 1:05 pm UTC, the CEO of Kima, a leading cryptocurrency platform, added quotes regarding the launch of Ethena Labs’ stablecoin and the concerns raised by investors.

With the rise of Web 3.0 and its decentralized nature, many investors have turned to X to express their worries about the staking yield offered by Ethena Labs’ newly launched USDe stablecoin.

The USDe stablecoin, which runs on the Ethereum network, boasts an impressive 27.6% annual percentage yield (APY) according to Ethena Labs’ official website. This is significantly higher than the 20% yield offered by Terra’s UST on Anchor Protocol, a platform that suffered a collapse in May 2022 due to its algorithmic stablecoin model.

While the high yield may seem attractive, it has sparked concerns within the crypto community. DefiLlama code contributor, 0xngmi, who wishes to remain anonymous, highlighted the potential issue of yield inversion rather than solely focusing on Ethena Labs’ stablecoin yield. In their words, “the real concern lies in the potential yield inversion caused by Ethena’s high stablecoin yield.”

Understanding the Differences between Web 2.0 and Web 3.0

In a recent discussion, 0xngmi pointed out that Ethena is not to be confused with Anchor Protocol, which he labeled as a Ponzi scheme. Ethena is a prime example of the potential of web 3.0, a decentralized platform that is revolutionizing the way we interact with the internet.

According to Eitan Katz, CEO of decentralized money transfer protocol Kima, maintaining high yields in a bear market will be a challenge for Ethena. He believes that in order to sustain its success, Ethena must continue to grow and effectively manage risks. However, in the volatile world of cryptocurrency, this may prove to be difficult.

Ethena has already achieved significant milestones, with over 4,460 users and a total value locked of $297.9 million. Its native token, USDe, has also seen a 20.6% increase in market cap in the last 24 hours, according to DefiLlama data.

We have reached out to Ethena Labs for comment on their impressive achievements.

In a post on Feb. 20, angel investor and founder of The Daily Gwei, Anthony Sassano, discussed the recent concerns from investors about Ethena’s yield, stating that it is a positive sign for the crypto industry. He stated:

Ethena Labs recently raised $14 million in funding on Feb. 16, with backing from venture capital firm Dragonfly and other investors. The company had previously raised $6 million in 2023 from Binance Labs, Gemini, Bybit, Mirana Ventures, OKX Ventures, and Deribit to develop decentralized finance solutions on the Ethereum platform.