Developer Raises Concerns About Ethena Becoming New UST
Developer Andre Cronje published a post questioning whether Ethena will be the next UST.
In a post on X on April 3, Cronje compared Ethena (USDe) to the infamous UST stablecoin.
“UST I had a high degree of confidence would fail, the simply mechanisms didn’t make sense to me, however, a lot of people I consider to be very smart were very vocal about how it can’t fail, this reached a point where I was convinced “I was wrong.”
Cronje analyzed the structure of perpetual contracts, a derivative product that allows traders to speculate on the price movements of an asset without holding the asset. He highlighted a critical vulnerability in this system: the dependence on income-generating assets such as staked Ethereum (stETH) as collateral.
By drawing a parallel between the structural flaws he sees in USDe’s system and the mechanisms that led to Terra’s downfall, Cronje raises a red flag about the sustainability of complex financial products that lack transparent risk mitigation strategies.
Responding to Cronje’s criticism, Ethena Labs founder Guy Young, also known as Leptokurtic, acknowledged the validity of the concerns raised.
Yesterday, Ethena Labs announced the launch of its governance token, ENA, and the expansion of its yield-earning stablecoin, synthetic dollar token USDe. In addition, Ethena launched an airdrop of 750 million ENA.
Users who participate in the Shard Campaign can claim free tokens. The number of coins participants receive will be proportional to the ‘shards’ or points accumulated before April 1.
BlackRock And The Institutional Embrace Of Bitcoin
BlackRock’s strategic shift towards becoming the world’s largest Bitcoin fund marks a pivotal moment in the financia... Read more
Robinhood Faces Regulatory Scrutiny: SEC Threatens Lawsuit Over Crypto Business
Robinhood, the prominent retail brokerage platform, finds itself in the regulatory spotlight as the Securities and Excha... Read more
Pump.fun Platform On Solana Faces Potential Exploit
Ongoing investigations reveal that Solana-based platform Pump.fun, which facilitates token launches, has reportedly been... Read more
Tornado Cash Developer Appeals Verdict, KOLs Slam Dutch System
Tornado Cash developer Alexey Pertsev has reportedly appealed a guilty verdict in the Netherlands as the case sparked a ... Read more
Senate Approves Reversal Of SEC Crypto Custody Bulletin
The U.S. Senate passed a measure to overturn an SEC bulletin on crypto custody standards, and it is now awaiting Preside... Read more
Will VeChain (VET) Be A Profitable Investment In May 2024?
VeChain’s native token, VET, is currently trading at around $0.034 and has nearly increased by 1.5% in trade volume ov... Read more