„Wake up Babe new UST dropped“

Just saw news dropped about a new algorithmic stablecoin using derivatives as back up so I dived deeper into it.

A quick summary:

„Ethena raised $6 million in seed funding led by Dragonfly. The project took inspiration from an Arthur Hayes article. He has called for the creation of an algorithmic stablecoin (NakaDollar, or NUSD) backed by bitcoin derivates. Ethena has developed a stablecoin, USDe, that maintains its dollar peg by using collateral from users to hedge price exposure by shorting ethereum using perpetual swaps.“

This time it’s different guys …

The best part:

Developed in response to Terra's failure, the new stablecoin has a novel approach to maintaining its dollar peg.

By holding equal amounts of staked ETH and perpetual swaps, it ensures that any gains or losses by either asset are essentially canceled out. It is developing a digitally native, USD-denominated Internet savings bond that generates yield from a combination of staked ETH and swap margins.

Or in other words, this looks like another exploitable system whales & traders will abuse once it’s big enough and there’s money to be made.

If this is the start of the bullrun and you’ll see a „defi hype 5-10% APY using Ethena“ remember me & this post lol