Davide
@0xdavide
🏦Adding sUSDe (Ethena Internet Bond) on Aave could lead to new standards (APY) in the coming months. First you should consider that sUSDe by default brings a yield of about 30%. This yield comes from a DeltaNeutral strategy: 1) LONG: ETH liquid staking (spot) 2) SHORT: ETH futures (obtaining a Positive Funding Rate, essentially long positions pay shorts) So Ethena is not exposed to market volatility but earns from ETH staking and Positive Funding Rate (ETH short). Adding sUSDe on Aave will bring very high APY of USDC, USDT and DAI. Basically the degen market (long term) will follow this cycle: 1) Lend sUSDe (30% APY) 2) Borrow USDC or USDT or DAI (let's assume 8-10% borrow APY) 3) Sell USDC, USDT, DAI for sUSDe 4) Lend sUSDe 5) Borrow USDC or USDT or DAI 6) Repeat the cycle (loop)
1 reply
0 recast
0 reaction
Davide
@0xdavide
This situation will bring high demand for USDC, USDT and DAI but little supply so the APY will increase a lot. Basically they will become profitable like sUSDe. The advancement of the Bull Market could increase the funding rate enormously in turn increasing the APY on sUSDe. In summary, in case of a strong bull market we could have: 1) Increase in APY on USDC, USDT, DAI 2) Further increase in APY on sUSDe (due to funding rate) 3) Liquidity shift from exchanges (off chain) to DeFi (on chain) 4) Super leverage of sUSDe 5) More liquidations Ethena is attracting more and more liquidity also with external airdrops such as Derive and Ethereal (for sENA stakers). If you are exposed to Ethena (ENA and sUSDe), today the situation should be calm. However in Bear Market, the things could get really heated.
0 reply
0 recast
0 reaction
