jakiro
Author: deGentranding, encrypted KOL; Translation: Bit chain Vision Xiaozou
Will Ethena collapse in a US -style crisis?
I saw some of the contents of the posts of some misunderstandings, I just wanted to clarify these misunderstandings in this article.(I have nothing to do with them, and I will not obtain any benefits due to their success or failure.)
first,What is Ethena?It is a synthetic US dollar agreement. Taking 1 ETH synthetic US dollar as an example, when buying the spot ETH (or STETH), it will hesitate to hedge the ETH short beam accordingly.
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So why is it a dollar?This is because the benefits are fixed under any normal circumstances.As long as the basis of the long -term/futures/sustainable contract is inevitable, a basket of stocks and the corresponding short positions will maintain the same value without holding and funding rates.
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So why is it so attractive?In short, because the capital injection has always been very positive -in the bull market, everyone is looking for leverage and cheap dollar borrowings.5bps every 8 hours?If the market rises 10%every day, this is not a problem.
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Therefore, Ethena’s recent yield seems to be about 35%.As long as there is a need for leverage in this field, this situation may continue.
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The reason why UST failed was because supporting the issued UST mortgage was native Luna. With the collapse of Luna prices, the US dollar pricing available mortgage was issued and sold to the market when it was issued and sold to the market.
However, in general, for Ethena, the support for supporting USDE is a basket of assets and usually preserves value in the entire price range.As long as the basis of the spot/sustainable contract or spot/futures contract has not skyrocketed.
Cryptocurrencies usually show downward convexity.The speed of price decline is faster than the rise.In my opinion, this design is actually very beneficial to Ethena.
As the price continues to fall, in the absence of liquidation, the proportion of US dollar cash held by Ethena has actually increased.In the following example, you can see that when ETH falls to 1k, it will cause 3.5K mortgage baskets to have 2.5K is cash …
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Is there risk?If there is risk, it is to use STETH as a mortgage.Compared with ETH, STETH’s spot liquidity is much smaller.However, after the Shapella was upgraded, STETH/ETH discount imo bottomed out.
Before Shapella, the STETH seller was made by the buyer.After Shapella, if the STETH/ETH exchange rate rises seriously, the seller can choose longer waiting time (1-5 days), and then extract STETH and exchange to ETH.
Another elephant in the house will be the risk of trading opponents/exchanges.If a exchange bankruptcy is bankrupt due to crisis, Ethena may experience major impairment.However, their exchange list looks pretty good.
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The last risk is left -operating risk.Ethena concept should be done.It is quite clever.However, it also relies on uncertain intelligent transactions, execution and risk management to a certain extent.
In the crisis of confidence, as long as Ethena’s execution is perfect, USDE will have a bottoming price because a basket of assets will maintain its value.However, I noticed that, in general, the crisis can make us mistakes -traders may be seduced or forced to withdraw from the basis trading, resulting in Delta risk.However, in general, Ethena’s basic concept should be feasible.
Ethena may also change the market mechanism and bring new price relationships -however, we can only evaluate in this regard.
In my opinion, Ethena will actually help the bull market.At present, the city merchants usually do not use the spot bulls to hedge their sustainable contract shorts (unless they are polishing the foundation difference), they want to see that Delta disappears.
Although Ethena is the neutral of Delta, the spot demand it created inadvertently will cause more upward price sliding points and put pressure on the basis.
In short, Ethena has good concepts and good functions.If it fails, it will be due to the implementation and risk of under the edge.
