Ethena.
Ethena issues USDe, a stablecoin backed by delta-neutral hedging strategies using staked Ethereum and short perpetual positions. It generates yield through staking rewards and funding rates from perpetual futures contracts. The protocol aims to provide a scalable, censorship-resistant alternative to traditional stablecoins.
The model provides a high-yield, crypto-native dollar alternative that captures massive liquidity in the DeFi ecosystem.
Funding rates may become negative during prolonged bear markets, potentially eroding the yield or the peg mechanism.
Uses an off-exchange settlement (OES) architecture to minimize custodial risk while maintaining capital efficiency on exchanges.
The protocol is exposed to counterparty risks on exchanges and potential de-pegging during extreme market volatility.