🚨 Stablecoin Showdown 🚨
What to know:
- Despite market volatility, USDe, a synthetic stablecoin, maintained its peg through most of the Monday Asia trading day, with brief dips down to $0.999.
- USDe’s market cap recently passed $6 billion.
As the world teetered on the brink of economic chaos, a lone stablecoin stood firm, its $1 peg a beacon of hope in a sea of uncertainty. Ah, USDe, how the mighty have fallen… not.
For those unfamiliar with the intricacies of stablecoins, let me enlighten you. USDe, unlike those plebeian stablecoins backed by fiat assets at a 1:1 ratio, is a synthetic stablecoin. Ah, but what does that mean, you ask? Well, it means that USDe maintains its peg by collateralizing stablecoins and leveraging a hedged cash-and-carry trade, which involves taking futures positions with large open interest available to stabilize value. Good heavens, it’s enough to make one’s head spin!
And yet, despite the market volatility brought on by the White House’s trade war threats, USDe spent most of the Monday trading day maintaining its $1 peg, with brief dips down to $0.999. One wonders if it was a mere coincidence or a deliberate attempt to test the mettle of this stalwart stablecoin.
Data from CoinGecko shows that the stablecoin’s market cap inched above $6 billion, up from about $5.7 billion a week ago. Ah, progress! And its funding rate also remained positive according to on-chain data. Funding rates, dear reader, are crucial for maintaining USDe’s peg to the dollar and managing market equilibrium. It’s a delicate dance, really.
A positive funding rate indicates that holders of long positions are paying a small fee to holders of short positions. Suggesting, of course, a slightly bullish market sentiment. Ah, but what does that mean, you ask? Well, it means that USDe is a safe haven, a refuge for investors seeking a stable return on their investment. And what better way to attract investors than with a 10% APY, stable over the last 30 days, according to a dashboard from Dune Analytics?
Of course, there were those who expressed concern about the size of Ethena’s reserve fund for USDe, with research house CryptoQuant highlighting that the fund might not be sustainable over $4 billion. Ah, but this reserve fund has grown proportionately to USDe’s market cap, and stands at $46.6 million at the end of Q4 2024. Crisis averted, one supposes.
Crypto market safe haven?
USDe’s stability plus yield-bearing appeal means investors could take refuge in the token. Arthur Hayes, chief investment officer at digital asset investment fund Maelstrom and co-founder of BitMEX, who expects BTC to slide to $75,000 in coming weeks, has record exposure to USDe.
“Maelstrom has raised the amount of staked Ethena $USDe it holds to record levels and continues to take profits on several shitcoin position,” Hayes said in a blog post last week.
“We are still bigly net long, but if my feeling is correct, then we will be positioned with copious amounts of dry powder ready to buy the dip on Bitcoin and a mega dip on many quality shitcoins,” Hayes added. Hayes is an investor in and an advisor to Ethena.
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2025-02-03 11:07