- Ethena Labs has built-in Bitcoin as a backing asset for USDe stablecoin.
- The founding father of CryptoQuant argued that the choice could not profit BTC holders.
- He recalled a possible contagion danger just like what was witnessed with Terra Luna’s UST.
Ki Younger Ju, the CEO of information analytics platform CryptoQuant, raised concern about Ethena Labs’ choice to again its just lately launched USDe stablecoin with Bitcoin.
In an announcement on Thursday, Ethena Labs revealed that Bitcoin (BTC) has been built-in as a backing asset for USDe. Which means Bitcoin now serves as collateral to uphold the peg of the artificial greenback stablecoin to the U.S. greenback.
The staff emphasised that shifting to BTC-backed positions marks permits USDe to increase considerably from its present $2 billion provide. Nevertheless, Ki Younger Ju has argued that the choice could not profit Bitcoin holders. He expressed apprehension, likening it to a possible contagion danger just like what was witnessed with Terra Luna’s ill-fated UST stablecoin in 2022.
Notably, the Terra staff repeatedly offered Bitcoin to help UST amid dropping its $1 peg, which considerably impacted Bitcoin’s worth. The founding father of CryptoQuant fears the potential for the same situation recurring with USDe.
Moreover, Younger Ju questioned how Ethena Labs plans to keep up a delta-neutral technique for Bitcoin throughout bear markets. He identified that in bull markets, they maintain spot BTC and brief BTC.
The trade pundit emphasised that the USDe stablecoin seems to be a Centralized Finance (CeFi) initiative run by a hedge fund, which he famous is efficient solely in bull markets. Younger Ju fears for the steadiness of USDe’s peg if their algorithm fails throughout bear markets.
Notably, USDe has skilled a outstanding growth in current months. It has turn into the fifth-largest USD-pegged stablecoin with a market cap exceeding $2 billion. Over the previous 30 days alone, the provision of USDe has surged by 156%. Presently, the annual share yield (APY) stands at 37.1%, having reached highs surpassing 60% APY.
In addition to, Ethena Labs has launched a governance token, ENA, which presently instructions a market valuation of $1.61 billion.
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