{"id":12303,"date":"2024-04-05T13:12:05","date_gmt":"2024-04-05T10:12:05","guid":{"rendered":"https:\/\/forklog.com\/en\/ethena-labs-incorporates-bitcoin-into-usde-collateral-drawing-comparisons-to-luna\/"},"modified":"2024-04-05T13:12:05","modified_gmt":"2024-04-05T10:12:05","slug":"ethena-labs-incorporates-bitcoin-into-usde-collateral-drawing-comparisons-to-luna","status":"publish","type":"post","link":"https:\/\/forklog.com\/en\/ethena-labs-incorporates-bitcoin-into-usde-collateral-drawing-comparisons-to-luna\/","title":{"rendered":"Ethena Labs Incorporates Bitcoin into USDe Collateral, Drawing Comparisons to LUNA"},"content":{"rendered":"<p>Ethena Labs has integrated Bitcoin as a collateral asset for its &#8220;synthetic dollar&#8221; USDe. An expert has described this as a risk to digital gold.<\/p>\n<blockquote class=\"twitter-tweet\" data-lang=\"en\">\n<p lang=\"en\" dir=\"ltr\">Excited to announce that Ethena has onboarded BTC as a backing asset to USDe<\/p>\n<p>This is a crucial unlock which will enable USDe to scale significantly from the current $2bn supply <a href=\"https:\/\/t.co\/FOZRWBrVZV\">pic.twitter.com\/FOZRWBrVZV<\/a><\/p>\n<p>\u2014 Ethena Labs (@ethena_labs) <a href=\"https:\/\/twitter.com\/ethena_labs\/status\/1775944410011926931?ref_src=twsrc%5Etfw\">April 4, 2024<\/a><\/p><\/blockquote>\n<p> <script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>According to the announcement, the move aims to &#8220;significantly&#8221; increase the stablecoin&#8217;s market supply from the current $2 billion. This is facilitated by access to the BTC derivatives market, which is &#8220;growing faster than Ethereum&#8217;s.&#8221;<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>&#8220;With $25 billion in open interest in Bitcoin futures available to Ethena for delta hedging, USDe&#8217;s scalability has increased more than 2.5 times,&#8221; the developers claim.<\/p>\n<\/blockquote>\n<p>The project made the stablecoin available on Ethereum&#8217;s mainnet on February 19. USDe can be locked in Ethereum staking (yielding 5%) or deposited in another DeFi protocol for additional income from futures trading (over 20%).<\/p>\n<p>The asset&#8217;s peg to the dollar is maintained through a delta hedging strategy in derivatives markets. Loss risks are mitigated by holding spot positions and shorts in options, with liquidation costs covered by asset income.<\/p>\n<h2 class=\"wp-block-heading\">Is Bitcoin at Risk?<\/h2>\n<p>CryptoQuant CEO Ki Young Ju expressed concerns about the risks to Bitcoin posed by its inclusion in USDe&#8217;s collateral assets.<\/p>\n<p>The expert drew parallels with the collapse of Terra&#8217;s token (LUNA) and its associated algorithmic stablecoin UST.<\/p>\n<blockquote class=\"twitter-tweet\" data-lang=\"en\">\n<p lang=\"en\" dir=\"ltr\">This isn&#8217;t good news for <a href=\"https:\/\/twitter.com\/hashtag\/Bitcoin?src=hash&#038;ref_src=twsrc%5Etfw\">#Bitcoin<\/a> holders\u2014it sounds like a potential contagion risk, like LUNA. Correct me if I&#8217;m wrong. Is it a good news? <a href=\"https:\/\/t.co\/LjPUUHq15f\">https:\/\/t.co\/LjPUUHq15f<\/a><\/p>\n<p>\u2014 Ki Young Ju (@ki_young_ju) <a href=\"https:\/\/twitter.com\/ki_young_ju\/status\/1776059226420584756?ref_src=twsrc%5Etfw\">April 5, 2024<\/a><\/p><\/blockquote>\n<p> <script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>&#8220;This isn&#8217;t good news for Bitcoin holders\u2014it sounds like a potential contagion risk, like LUNA. Correct me if I&#8217;m wrong. Is it a good news?&#8221; wrote the founder and head of CryptoQuant.<\/p>\n<\/blockquote>\n<p>In his view, Ethena Labs&#8217; strategy will maintain delta neutrality for BTC in a bull market but will face challenges in a bear market. In the latter case, capacity may fall short of necessary sales volume, causing disruptions.<\/p>\n<p>As a result, Ju compared USDe to a &#8220;<span data-descr=\"centralized finance\" class=\"old_tooltip\">CeFi<\/span> stablecoin managed by a hedge fund.&#8221;<\/p>\n<h2 class=\"wp-block-heading\">Growing Criticism of Ethena Labs&#8217; &#8220;Synthetic Dollar&#8221; Mechanism<\/h2>\n<p>Former SushiSwap advisor known as OMAKASE also highlighted historical issues with the approach used by Ethena Labs.<\/p>\n<blockquote class=\"twitter-tweet\" data-lang=\"en\">\n<p lang=\"en\" dir=\"ltr\">Delta neutral strategies are usually never delta neutral. Post dot-com boom in Singapore, it took years for banks to unwind delta neutral books that had suddenly turned illiquid.<\/p>\n<p>Size begets slippage.<\/p>\n<p>\u2014 OMAKASE (@OmakaseBar) <a href=\"https:\/\/twitter.com\/OmakaseBar\/status\/1776074506442027374?ref_src=twsrc%5Etfw\">April 5, 2024<\/a><\/p><\/blockquote>\n<p> <script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>&#8220;Delta neutral strategies are usually never delta neutral. Post dot-com boom in Singapore, it took years for banks to unwind delta neutral books that had suddenly turned illiquid. Size begets slippage,&#8221; the expert wrote.<\/p>\n<\/blockquote>\n<p>Co-founder of Fantom Foundation Andre Cronje also criticized the stability mechanism of USDe, drawing parallels with LUNA.<\/p>\n<blockquote class=\"twitter-tweet\" data-lang=\"en\">\n<p lang=\"en\" dir=\"ltr\">Every so often we see something new in this space. I often find myself on the mid curve for an extensive amount of time. I am comfortable here. That being said, there have been events in this industry I wish I was more curious about, there have also been events I definitely did\u2026<\/p>\n<p>\u2014 Andre Cronje (@AndreCronjeTech) <a href=\"https:\/\/twitter.com\/AndreCronjeTech\/status\/1775398490404724914?ref_src=twsrc%5Etfw\">April 3, 2024<\/a><\/p><\/blockquote>\n<p> <script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>In his opinion, Ethena Labs&#8217; strategy is successful in a rising market, thanks to positive funding for closing positions. When the trend reverses, it will cease to work, and the scale will only exacerbate the problems.<\/p>\n<p>As reported, these are not the first industry participants to <a href=\"https:\/\/forklog.com\/en\/news\/doubts-arise-over-ethena-labs-stablecoin-viability\">question the viability<\/a> of USDe.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Ethena Labs has integrated Bitcoin as a collateral asset for its &#8220;synthetic dollar&#8221; USDe. An expert has described this as a risk to digital gold. Excited to announce that Ethena has onboarded BTC as a backing asset to USDe This is a crucial unlock which will enable USDe to scale significantly from the current $2bn [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":12302,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"select":"","news_style_id":"","cryptorium_level":"","_short_excerpt_text":"","creation_source":"","_metatest_mainpost_news_update":false,"footnotes":""},"categories":[3],"tags":[1150,1138,807],"class_list":["post-12303","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news-and-analysis","tag-news-plus","tag-opinions","tag-stablecoins"],"aioseo_notices":[],"amp_enabled":true,"views":"18","promo_type":"","layout_type":"","short_excerpt":"","is_update":"","_links":{"self":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/12303","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/comments?post=12303"}],"version-history":[{"count":0,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/12303\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/media\/12302"}],"wp:attachment":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/media?parent=12303"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/categories?post=12303"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/tags?post=12303"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}