Ethena Labs, the synthetic stablecoin protocol, has recently integrated with the centralized exchange wallets of Binance, Bybit, OKX, and Bitget. This integration allows users who lock their USDe stablecoins for at least 7 days through these exchange Web3 wallets to receive a 20% reward boost. The rewards, referred to as “Ethena sats,” can be converted into the platform’s native ENA token at the end of each campaign. To earn these rewards, users need to deposit Ethena USDe stablecoins into their exchange wallets, connect to the Ethena decentralized finance (DeFi) protocol, and stake their holdings. As of now, the protocol has a total value locked of $2.274 billion and generates an annualized revenue of $178 million.
The rewards offered by the Ethena protocol have gained significant attention and usage. According to blockchain analytics firm Lookonchain, the top 10 wallets have withdrawn a total of 37.5 million ENA ($51 million) and staked them since the start of Ethena Staking Season 2.
On March 8, just under a month after launching its USDe stablecoin, Ethena became the highest-earning decentralized application in the crypto space by offering a 67% annual percentage yield (APY) on USDe. Currently, the protocol provides an APY of 24% on its stablecoins. However, it’s important to note that this yield comes with certain risks as it relies on the trading income of complex Ethereum derivatives to fulfill the promised returns.
In response to concerns about the high yield, Guy Young, the founder of Ethena Labs, reassured Cointelegraph in an interview on Feb. 22 that the comparison to the failed Terra stablecoin, TerraUSD (UST), was an overreaction. He stated that Ethena’s yields were organic and sustainable, unlike the fabricated yields of Anchor. Young explained that Ethena’s verifiable yields are derived from various sources, including Ethereum consensus layer inflation rewards, execution fees paid to Ether (ETH) stakers, maximal extractable value fee captures obtained by Ether stakers, and trading income provided by Ethena Labs. Specifically, the firm engages in short derivative positions when receiving long-position collateral assets for minting USDe, and the resulting spread is distributed to USDe holders as yield.
In related news, Frax Finance has allocated $250 million of USDe to dive into DeFi liquidity.