Ok, it's finally time: Ethena's USDe has hit mainnet!

http://app.ethena.fi/join/agsrl

Half the people I talk to are insanely hyped (20%+ yield!) and half are understandably skeptical (20%+ yield?!)

I think this deserves some explanation 🧵

USDe yield comes from a combination of ETH staking yield and perpetual funding rates

USDe is backed by LST collateral and an equivalent short position using futures on both centralized and decentralized trading venues

Simply put: USDe yield = staking rate + demand for leverage

The LSTs are held using MPC custody services, where the balances can be mirrored as collateral on the exchanges listed previously

This allows for access to deep CEX liquidity for the corresponding short positions, while separating custody risk from the trading venues

Ethena isn't the first one to propose the idea of a delta neutral synthetic dollar

In fact, UXD and Lemma Finance both shipped versions of this concept 2-3 years ago

However, this was pre-LSTs and limited by the risks and low volumes of onchain perp venues at the time

Ethena Labs chose to explore a different part of the design space, opting to integrate with centralized trading venues and use MPC custodians

It's certainly less decentralized than some stablecoin designs like DAI, but I would argue meaningfully more so than USDC and USDT

All stablecoins (and for that matter, all crypto products... and for that matter, all financial products... and for that matter, everything in life) involve risk

Ethena Labs does a thorough job enumerating the major ones here:

All stablecoins (and for that matter, all crypto products... and for that matter, all financial products... and for that matter, everything in life) involve risk

Ethena Labs does a thorough job enumerating the major ones here: https://ethena-labs.gitbook.io/ethena-labs/solution-overview/risks

If you've DYOR and you're intrigued enough to try it out, here are details on the "shard campaign" (totally not points...): https://mirror.xyz/0xF99d0E4E3435cc9C9868D1C6274DfaB3e2721341/lJHZjwoyS7k2UqfrMeOItH_JqRlmk3yJ8_SkrISGpmA

And here's a ref link for you to join:

If you've DYOR and you're intrigued enough to try it out, here are details on the "shard campaign" (totally not points...): https://mirror.xyz/0xF99d0E4E3435cc9C9868D1C6274DfaB3e2721341/lJHZjwoyS7k2UqfrMeOItH_JqRlmk3yJ8_SkrISGpmA

And here's a ref link for you to join: http://app.ethena.fi/join/agsrl

USDe is a delta neutral synthetic dollar

It can be staked/wrapped into the non-rebasing sUSDe for easier use for the thing most people are looking for these days: yield

In most scenarios that yield tends to be quite high, currently 27.6% APY

But the yield source isn't magic...

Thanks for this thread Dan! I was looking on farcaster to see if someone tackled USDe already. I'm wondering though: What happens to the yield if funding rates turn negative for a long enough period to deplete the insurance fund? Do you know?
Thanks already for all the great insights!