What is Ethena? Understand the ambition of "encryption native US dollar" in one article.

Have you ever thought about why USDC and USDT rely on dollar reserves in bank accounts? If TradFi shakes, these stablecoins have to suffer along. Ethena wants to do something different - maintain a stable USDe completely through encryption assets + derivation Hedging.

Core Mechanism: Hedge Stability with Futures and Spot

In simple terms, USDe is not a traditional fiat-backed stablecoin, but a synthetic stablecoin. Its stability comes from a clever hedging strategy:

• Spot Market: Holding crypto assets such as BTC, ETH
• Derivation side: short futures and perpetual contracts simultaneously
• Result: The two sides cancel each other out, and the price stabilizes around $1.

This mechanism is somewhat similar to “delta hedging” in traditional finance, but it is executed automatically using on-chain data and smart contracts, without the need to trust intermediaries.

Dual Product Layout: USDe + sUSDe

USDe = stablecoin entity, can be freely used and traded on 24 chains.

sUSDe = Staking version, with an APY of up to 19% in 2024. Where does the profit come from?

• Futures funding fee income
• Basis trading profit
• Liquidity Management Revenue

It's simply a “dollar that lays eggs.”

The Triple Identity of Token ENA

Total supply of 1.5 billion coins, allocated to the core team (30%), investors, and ecological development (30):

1. Governance Rights: Voting on protocol parameter decisions
2. Liquid Staking: Earn sENA by staking.
3. Value Capture: Appreciation with the increase in USDe issuance.

Why is this design interesting?

✓ Not relying on TradFi — Anti-censorship, no frozen fund risk ✓ Strong Scalability——The derivatives market can issue as much USDe as it is large. ✓ Multi-chain deployment——24 public chains are online, liquidity is everywhere ✓ Yield Competitiveness——sUSDe's 19% APY outshines regular stablecoins

Risks and Challenges

Of course, it's not perfect:

• The volatility of the derivatives market may impact the hedging effect.
• Regulatory risks still exist
• There is significant competitive pressure with USDC/USDT
• Continuous support for liquidity is needed.

Where is the long-term potential?

As the global demand for encryption native financial infrastructure grows, USDe may become the foundational building block of the DeFi world. Especially once institutional investors accept this logic, the growth potential could be considerable. As a governance token, ENA's long-term value depends on the adoption rate of USDe and the ecological network effect.

Summary in one sentence: Ethena is attempting to break the reliance of stablecoins on TradFi by using on-chain data and algorithms to maintain stability. This is an imaginative yet challenging experiment.