Mounting Concerns Over Ethena USDe’s Promised 27% Yield Following Mainnet Launch

Investors in the cryptocurrency community are expressing concern about the staking yield of Ethena Labs’ newly launched stablecoin, USDe. The stablecoin was launched on the public mainnet on February 19, offering a 27.6% annual percentage yield (APY), which is significantly higher than the 20% yield offered by Anchor Protocol on Terra’s UST before Terra’s collapse in May 2022.

Many in the crypto community are worried about the potential for a yield inversion, where investors start losing money when yields turn negative. The larger the stablecoin, the more money that is lost. Previous projects have tried to address this issue, but the cost of opening and closing positions ate into their yields.

A pseudonymous DefiLlama code contributor, known as 0xngmi, explained on a forum post that Ethena is different from Anchor Protocol, which he categorized as a Ponzi scheme. He still believes that maintaining high yields like Ethena’s will be challenging in a bear market. Eitan Katz, CEO of decentralized money transfer protocol Kima, agrees that sustaining such high yields relies on continuous market growth and effective risk management.

Ethena has gained significant traction since its launch, with over $297.9 million in total value locked and more than 4,460 users. The market cap of USDe also rose by 20.6% in the past 24 hours to $291.93 million. has reached out to Ethena Labs for comment on the concerns raised.

Some industry experts view the scrutiny of Ethena’s yield as a positive sign for the crypto industry. Anthony Sassano, an angel investor and founder of The Daily Gwei, stated that it is healthy to see people questioning the design of Ethena and exploring the underlying risks. In the previous crypto cycle, those who raised concerns were often dismissed, but now more individuals are questioning these high yield offerings.

Ethena Labs recently announced raising $14 million in funding, supported by venture capital firm Dragonfly and other investors. In 2023, the firm also secured $6 million from notable investors like Binance Labs and Gemini to develop decentralized finance solutions on the Ethereum network.

2 thoughts on “Mounting Concerns Over Ethena USDe’s Promised 27% Yield Following Mainnet Launch

  1. Ethena Labs should be held accountable if investors lose money because of their unrealistic promises.

  2. I’m not buying into Ethena’s hype. It’s just another bubble waiting to burst.

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