Noah
Noah
USDT0.00%
AAVE-1.20%
Ethena is buying $10mm ENA a day via DAT, paying out basis yield to usde on Aave, has $100s of millions of annual ENA incentives via seasons. There are venture investors unlocking, and yield funds selling down ENA + holding USDe. ENA must continue to find sources of demand to keep token price afloat, in order to keep the yield spread high enough for levered looping to be viable. This will be partially done by having partner protocols issue token incentives on top of their token incentives as well. Simultaneously, the basis trade will need to expand to accommodate Ethena's OI growth, requiring price increases on majors. It's a good flywheel, but it's inherently highly reflexive and will have to fight the law of large numbers as it continues to grow, or find significant organic demand at lower yields.
Felipe Montealegre
Felipe Montealegre
The amount of leverage that depends on USDe rate (incl. ENA incentives) > Aave USDT borrow rate + 2% This is not the largest source of systemic risk (at all) but it’s large on an expected value basis because of how likely it is to matter at some point over the next twelve months
Sourced fromtwitter
3.4K
0
The content on this page is provided by third parties. Unless otherwise stated, OKX is not the author of the cited article(s) and does not claim any copyright in the materials. The content is provided for informational purposes only and does not represent the views of OKX. It is not intended to be an endorsement of any kind and should not be considered investment advice or a solicitation to buy or sell digital assets. To the extent generative AI is utilized to provide summaries or other information, such AI generated content may be inaccurate or inconsistent. Please read the linked article for more details and information. OKX is not responsible for content hosted on third party sites. Digital asset holdings, including stablecoins and NFTs, involve a high degree of risk and can fluctuate greatly. You should carefully consider whether trading or holding digital assets is suitable for you in light of your financial condition.