Ethena: The "Federal Reserve" of the New Generation of Crypto Assets

1. Ethena Team Background

The Ethena team members have extensive expertise and practical experience in the fields of Crypto Assets, finance, and technology. Founder G previously worked at a large hedge fund and established Ethena after the Luna crash. The COO was a product manager at a well-known investment firm and has also worked at a derivatives trading platform. The Asia-Pacific institutional growth director has held positions such as investment research manager and head of institutional partnerships.

2. Financing Situation

According to data platforms, Ethena has completed three rounds of financing, with a total funding amount of $119.5 million. Major investors include several well-known venture capital firms. Ethena's investors encompass exchanges, market makers, and investment institutions with traditional financial backgrounds, providing funding support and industry resources for its development.

3. Positioning and Products of Ethena

Ethena is a synthetic dollar protocol that has launched the US dollar stablecoin USDe and the US dollar savings asset sUSDe. The stability of USDe is supported by Crypto Assets and corresponding Delta neutral hedge positions.

Ethena's goal is to connect the funds of CeFi, DeFi, and TradFi through USDe, capturing the interest rate differences between these areas to provide users with higher returns. If the scale of USDe is large enough, it is expected to promote the convergence of capital and interest rates among these three fields.

The minting and redemption of USDe is limited to two independent legal entities on the whitelist. The minting party needs to interact with the smart contract using BTC/ETH/ETH LSTs/USDT/USDC as collateral. The pricing of Backing Assets comes from multiple sources, including centralized and decentralized exchanges, over-the-counter markets, and oracle services.

To ensure the stability of USDe, Ethena adopts an automated delta-neutral strategy to hedge against price fluctuations of the collateral assets.

The yield of sUSDe comes from Ethena's management of collateral, including deposit interest, funding rate income from futures hedging positions, and ETH staking rewards.

4. Innovations of Ethena

1. The pioneering use of Delta-neutral strategies to hedge against price fluctuations of collateral assets, enhancing stability.

2. The capital efficiency is far higher than that of most stablecoin projects, with a collateralization ratio close to 1:1.

3. Adopt the OES custody model to ensure asset safety and reduce single point risk.

4. Connect CeFi, DeFi, and TradFi to capture interest rate differentials.

5. Meet the asset allocation needs of traditional financial clients in a low interest rate environment through the iUSDe product.

5. Current Development Status of the Project

USDe has become the third largest dollar stablecoin, with a circulation exceeding $5.5 billion. Ethena's revenue is growing rapidly and is the second fastest cryptocurrency startup to reach $100 million in revenue.

Ethena has become an important part of several DeFi protocols, such as Pendle, Sky, Morpho, etc. At the same time, it is building an ecosystem around USDe, planning to launch a decentralized trading platform and on-chain trading protocol.

Ethena also collaborates with traditional financial institutions, such as launching USDtb products with a large asset management company.

6. Potential Risks

1. The core source of income is unstable, and there may be sustained negative returns during a bear market.

2. The exchange's automatic deleveraging mechanism may affect delta-neutral strategies.

3. Partners may bring liquidity risks, such as sudden large-scale redemptions.

7. Analysis of the Investment Value of ENA Tokens

ENA currently has an FDV of 5.6B and a circulating market value of 2B. The valuation for the first two rounds of financing was 300 million USD, and the current coin price still offers more than 18 times return.

Token Unlocking Plan:

• Before May 5th, it mainly consists of 2% of the exchange issuance shares and a portion of the team's linear unlocking shares.
• Some OTC shares will be unlocked starting in April, with a cost of about 0.25U
• Starting from May 5th, an additional 78 million + ENA investment institution shares will be unlocked each month.

Recently, ENA has seen a significant decline, pulling back about 70% from its peak. In the short term, there is considerable unlocking pressure, but in the long run, the project still has development potential.