Cryptocurrency investors have taken to X to express their concerns about the staking yield of Ethena Labs’ recently launched stablecoin. On February 19, Ethena Labs released its USDe stablecoin on the public mainnet, offering a 27.6% annual percentage yield (APY) according to the company’s homepage. This yield is significantly higher than the 20% yield previously offered by Anchor Protocol before its collapse in May 2022.
The high yield opportunity has raised widespread concerns within the crypto community. A pseudonymous DefiLlama code contributor known as 0xngmi expressed concern about a potential yield inversion, rather than focusing on Ethena’s high stablecoin yield. In a subsequent reply, 0xngmi emphasized that Ethena is fundamentally different from Anchor Protocol, which they categorized as a Ponzi scheme.
Eitan Katz, the co-founder and CEO of decentralized money transfer protocol Kima, believes that maintaining such high yields will be challenging in a bear market. He suggests that Ethena may need to lower its yield in the future, stating that the sustainability of USDe largely depends on continuous market growth and effective risk management. However, Katz also acknowledges that achieving stability in the crypto industry is highly unlikely.
Ethena has achieved a total value locked of $297.9 million and has attracted over 4,460 users, according to its homepage. In the past 24 hours, USDe’s market cap has risen by 20.6% to $291.93 million, according to DefiLlama data.
Cointelegraph has sought comment from Ethena Labs, and further information will be provided as it becomes available.
Anthony Sassano, an angel investor and founder of The Daily Gwei, considers the investor concern surrounding Ethena’s yield to be a positive sign for the crypto industry.
On February 16, Ethena Labs announced that it had raised $14 million in funding, with support from venture capital firm Dragonfly and other investors. The company previously secured $6 million in 2023 from Binance Labs, Gemini, Bybit, Mirana Ventures, OKX Ventures, and Deribit to develop decentralized finance solutions on Ethereum.
This story is still developing, and additional information will be provided as it becomes available.