Ethena has picked up some serious traction in its short existence with over $1.4 Billion in market cap. Many users have been drawn in by the rather incredible stated 35.4% yields available on their stablecoin USDe
After the incredible success of Ethena USDe the company is now coming up with their governance token #ETHENA ( ENA) . They are set to airdrop 750 million ENA tokens, 5% of the total supply and 2% of the supply will be given out via Binance launchpool. Now lets dive into what is ENA and how you can farm some free tokens.
What is Ethena?
Ethena is a synthetic dollar protocol that aims to provide crypto investors with dollar-denominated savings based on blockchain. The team calls this savings product the “Internet Bond.” The protocol’s primary synthetic asset, USDe, is meant to achieve 1-to-1 price parity with the US dollar by delta-hedging staked Ethereum collateral.
How Ethena generate 35.4% yield?
According to the whitepaper, the Internet Bond generates yield in two ways
Delta hedging of derivatives positions against ETH held by the protocol ensures USDe’s peg
The Internet Bond combines yields collected from staked ETH and “the funding & basis spread from perpetual and futures' markets.”
How Does Ethena Protocol Work?
Ethena holds stETH and issues USDe 1:1, with that stETH as collateral. They also hold short positions on ETH which means that they make money when ETH goes down. This protects the collateral. They also earn a funding rate on their short position which is their reward for holding options that are shorting the market when the general market is going long. They pass along that yield from the funding rate and the native yield from the stETH to USDe holders in the form of yield.
ENA token use cases
As i am writing about the ENA token not their stable coin. At the time of writing, it’s not exactly clear what the role of the ENA token will be. In my opinion, and given its similarity to some other protocols in the market, the most likely use case will likely be governance-oriented.
If that is indeed the case, ENA could be used to Allow holders to participate in governance decisions, such as
Deciding on the extent of USDe staking rewards
The ratio of futures and options contracts used for delta-hedging, and similar.
My Opinion About the project
Looking at how good the marketcap of Ethena stable coin is , The annual yield they are offering , The total value locked is $1.5 billion which is huge and looking at their userbase the project looks great.
But i personally do not like the fact that their yield is coming from hedging/ shorting Eth and from positive funding rates on Ethereum. When the funding rates are positive traders who are shorting the market will receive the funding fee from exchanges for holding their positions.
However, the biggest risk here comes in the form of a sustained negative funding rate on ETH. Since Ethena needs to hedge with short positions on ETH to maintain a stable USDe price, if there was a prolonged period of negative funding rates, Ethena would begin to bleed money.
The other risk I want to discuss is the difficulty in maintaining derivative positions across multiple exchanges and managing those positions in real-time. What if there was a massive price movement? I know some of these positions are managed by automated systems, but…in a black swan event…what if Ethena could not exit their positions fast enough and got liquidated?
So there are few if's that comes within their strategy to make yield for the stakers.
How to earn ENA tokens on Binance Launchpool
Binance launchpools are absolutely free money for the holders of BNB and FDUSD. Since it's the free money and you can't lose anything in it so you can participate in the binance launchpool.
You’ll need some BNB or FDUSD tokens to stake.
head over to the menu on the top side of the Binance interface and select "More". Then, go to "Launchpad & Launchpool".
Then, find the available Ethena farming pools. Depending on which tokens you want to stake, select the FDUSD Pool or BNB Pool. Then, follow the instructions provided by the exchange.
The farming period for ENA i: 2024-03-30 00:00 (UTC) to 2024-04-01 23:59 (UTC). You can use this link for a quick view.
My price prediction at the time when ENA trading will start
The most recent launchpads on binance were launched with an average marketcap of $380-$450 million
if ETHENA (ENA) launched with the same average marketcap i think it will be launched at a price range of $0.25 - $0.35
ENA Tokenomics and token rewards for stakers
Token Name: Ethena (ENA)
Max Token Supply: 15,000,000,000 ENA
Initial Circulating Supply: 1,425,000,000 ENA (9.5% of max token supply)
As a final note, here’s a quick breakdown of key dates and information about the Ethena Launchpool campaign:
I hope you find this article informative and read my thoughts on
#ENALAUNCHPOOL
You can use these links to get more details about it.
Binance Announcement:
https://www.binance.com/en/support/announcement/introducing-ethena-ena-on-binance-launchpoolfarm-ena-by-staking-bnb-and-fdusd-6c216f219f0e42adb1849759dee3fbd9
Website:: https ://www.ethena.fi/
Whitepaper: https ://ethena-labs.gitbook.io/ethena-labs/
X: https ://twitter.com/ethena_labs
Discord: https ://discord.gg/QqgVaUmM
Telegram: https ://t.me/ethena_labs
