Ethena Labs introduced to again its USDe artificial greenback with Bitcoin and a few crypto specialists have raised crimson flags on the transfer as it could crash the crypto market. Amongst these specialists, on-chain knowledge platform CryptoQuant CEO stated USDe backed by Bitcoin raises dangers of a possible Terra LUNA-like disaster.
CryptoQuant CEO Purple Flags Ethena Backing USDe With Bitcoin
Ki Younger Ju, founder and CEO of CryptoQuant, stated Ethena onboarding Bitcoin as a backing asset to USDe isn’t excellent news for Bitcoin holders.
He believes backing USDe with Bitcoin dangers a possible contagion much like LUNA. Terra-LUNA maintained a peg for UST stablecoin by Bitcoin reserves on the Luna Basis Guard (LFG), which was bought to take care of the peg. The Terra-LUNA disaster crashed the crypto market and triggered bankruptcies for a number of crypto corporations reminiscent of crypto hedge fund Three Arrows Capital.
CryptoQuant CEO particularly identified the issue in sustaining delta-neutral technique for BTC in bear market. In bull market, Ethena Labs plans to carry spot BTC and brief BTC as a part of money and carry commerce. He added that promoting BTC to stabilize USDe’s peg if their algorithm fails throughout bear markets is a giant concern for him.
“If there’s a way to brief BTC by holding some DeFi-wrapped BTC, the market measurement could be smaller than its TVL. It is a CeFi stablecoin run by a hedge fund, efficient solely in bull markets. Right me if I’m incorrect,” stated Ki Younger Ju.
Sometimes we see one thing new on this house. I typically discover myself on the mid curve for an in depth period of time. I’m snug right here. That being stated, there have been occasions on this business I want I used to be extra inquisitive about, there have additionally been occasions I undoubtedly did…
— Andre Cronje (@AndreCronjeTech) April 3, 2024
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Ethena’s USDe Artificial Greenback
Ethena Labs claims the essential Bitcoin unlock to allow USDe to scale considerably from the present $2 billion provide to $10 billion market cap. Customers must deposit stablecoins reminiscent of USDT, FRAX, DAI, crvUSD, and mkUSD to get Ethena’s USDe.
In the meantime, it generates a yield of 37% by shorting Ethereum (ETH) futures and pocketing funding charges. Crypto specialists warn USDe is a brand new protocol and never a stablecoin and will have a constructive or destructive yield based mostly in the marketplace circumstances.
In truth, Aave plans to drop MakerDAO’s DAI as collateral after MakerDAO proposed allocating 1 billion DAI stablecoin, practically 20% of its complete provide to USDe. AAVE chan founder Marc Zeller believes there’s a main contagion danger
Ethena (ENA) worth fell 9% within the final 24 hours, with the value presently buying and selling at $0.922.
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The introduced content material could embrace the private opinion of the creator and is topic to market situation. Do your market analysis earlier than investing in cryptocurrencies. The creator or the publication doesn’t maintain any accountability on your private monetary loss.
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