A Peek at Ethena ($ENA) Price & TVL Growth After Airdrop Release

Bittime - The price of Ethena ($ENA) jumped 29% on Wednesday April 3, 2024 after its governance token was distributed to users.

After the release via airdrop, many people in the crypto community asked about the price growth & TVL of Ethena ($ENA). This article will explore this question, read carefully.

ENA Ethena Experiences Significant Surge Post-Launch

Ethena experienced rapid growth after its governance token was distributed to users on Tuesday.

The token is also listed for trading on well-known crypto asset exchanges such as Binance, Bybit, OKEx, and MEXC. Since its launch, the price of ENA has increased by more than 100%.

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Ethena ($ENA): The Crypto Asset Taking the Market by Storm

Ethena, a crypto asset that debuted on exchanges at a price close to $0.640, has caught the attention of investors.

On Wednesday, Ethena hit an all-time high of $1,297 before finally stabilizing at around $1,112.

Ethena's performance outperformed many other crypto assets in the top 100 category. Its market capitalization has grown to $1.72 billion, with a fully diluted valuation of $17.2 billion.

Also read: W Token Price Immediately Soars 10%, Wormhole Gains Momentum with Airdrop and Listing on Major Exchanges!

Price Growth and Total value locked (TVL)

Ethena's on-chain metrics show alignment with price growth. Total value locked (TVL) has increased more than 2,100% since the start of the year, according to data from DeFiLlama.

Quoted from fxstreet, one of the main factors for the increase in TVL is the high yield of around 27.6% offered on Ethena's flagship product, USDe.

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USDe High Yield: To Continue or Not?

The exchange rate of USDe, a synthetic dollar crypto asset, is indeed high. However, there are doubts about its sustainability.

Ethena explains that USDe is pegged to USD through staking Ethereum (ETH) and shorting ETH on centralized exchanges. USDe's high yield comes from ETH staking and ETH short funding fees.

Recently, MakerDAO proposed an allocation of 600 million DAI (stablecoin) to USDe via Morpho Labs. This has drawn criticism.

Marc Zeller, Aave's co-founder, called it reckless. The Aave Chan Initiative (ACI) even proposed reducing LTV DAI on Aave to 0%.

Another X user, @Tardfiwhale, who previously highlighted UST's weaknesses, has published several posts stating that USDe has many flaws in its design and yield generation process.

Analyzing USDe's Sustainability

DeFi solutions architect Andre Cronje made a post questioning the long-term viability of USDe.

He cites potential weaknesses in the delta hedging method and states that even if things are going well at the moment (because the market is positive and the shorting funding rate is positive), eventually funding could become negative, margin/collateral is liquidated, and there is no asset backing.

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