Bittime - Ethena, a relatively new blockchain company, is on the rise. The demand for the solution is increasing among crypto investors. Their ENA token was trading at $1.1065 on Sunday morning. While the price is lower than this year's high of $1.5177, it is up about 277% from its low. Its market capitalization also jumped to more than $1.5 billion.
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Ethena's performance has been largely driven by growing demand for its stablecoin , USDe, which has become the seventh largest coin in the industry. USDe has assets of over $2.3 billion, an incredible figure for a newly launched asset.
Worries about Losing Peg USDe
However, the rapid growth of USDe and Ethena raises serious questions, including comparisons with Terra, which collapsed in 2022.
Ethena offers yields to its holders, in contrast to fully collateralized stablecoins such as Tether and USD Coin.
Tether and USD Coin do not provide rewards to holders, instead the profits go directly to the issuer.
For example, Tether generated more than $6.2 billion in profits in 2023, while Circle had revenue of $779 million in the first half of the year.
Ethena's USDe rewards its 147,000 users with an annual APY of 17.2%, much higher than the average yield on high-risk corporate bonds.
The ICE BofA US High Yield Index has a yield above 7.87%.
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With these high yields, USDe holders can theoretically outperform the market. However, the risk is that, unlike USDT and USDC, USDe is not collateralized 1:1 by the US dollar.
On the other hand, USDe is an algorithmic stablecoin supported by a "cash and carry" strategy. This strategy involves buying assets and shorting derivatives.
Historically, this arbitrage strategy has been successful, as is the case with ETFs such as JEPI and JEPQ which are growing rapidly. However, the situation can worsen, as we saw with the collapse of Terra and its ecosystem.
Just like USDe, Terra has a stablecoin called Terra UST, which offers returns of over 20% to its users. This strategy worked well for months, causing a surge in assets. The situation changed drastically in 2022 when the stablecoin lost peg, causing losses of more than $40 billion.
This does not mean that USDe will definitely lose its peg.
However, this is to show that USDe investments carry significant risks, especially when the crypto market is weak.
Bitcoin plunged below $65,000 on Saturday while the total market capitalization of all coins fell 6% to $2.3 trillion.
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How to Buy Ethena (ENA) on Bittime
You can buy and sell Ethena (ENA) in an easy and safe way via Bittime . Bittime is one of the best crypto applications in Indonesia which is officially registered with Bappebti.
Ethena (ENA) is available on Bittime with the market pair ENA/IDR . To be able to buy ENA IDR at Bittime, make sure you have registered and completed identity verification. Apart from that, also make sure that you have sufficient balance by depositing some funds into your wallet. For your information, the minimum purchase of assets on Bittime is IDR 10,000. After that, you can purchase crypto assets in the application.
Learn the complete guide on how to buy Ethena (ENA) on Bittime .
Monitor price chart movements for Ethena (ENA), Bitcoin (BTC) , Ethereum (ETH) , Solana (SOL) and other cryptos to find out today's crypto market trends in real-time on Bittime.
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DISCLAIMER: This article is informational in nature and is not an offer or invitation to sell or buy any crypto assets. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices can change significantly from time to time and Bittime is not responsible for changes in fluctuations in crypto asset exchange rates.
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