Ethena, a high-performance protocol that leverages the concept of synthetic dollar, has just announced the launch of its governance token ENA, which will be distributed to its community through an airdrop.
Anyone who has participated in the incentive campaign and has farmed “shards” is eligible to redeem the cryptocurrency, which will be available from April 2nd.
Let’s see below how Ethena works and the details of the inauguration of the new token.
Ethena: what is this $1.4 billion yield protocol?
Ethena is a yield protocol, which introduced for the first time in the history of DeFi the concept of synthetic dollar with the digital resource USDe, with which returns are generated from innovative hedging strategies and from Ethereum staking.
Ethena is betting everything on USDe, which represents the cornerstone currency of the project, built to be scalable, stable, and resistant to censorship.
It is an algorithmic stablecoin, which maintains its peg through a sophisticated delta-hedging mechanism with collateral in ETH.
The protocol, thanks to its stablecoin, offers an investment tool called “Internet Bond”, which provides a 10% yield to USDe holders, composed of the returns from liquid stakes in Ethereum staking, combined with the activity of arbitrage of the funding rate in derivatives of the same currency.
The LST resources that Ethena invests in are: stETH, cbETH, rETH, WBETH, fxsETH, and BETH.
The platforms where it goes to do short hedging for each collateral position in ETH are Gmx, Dydx, Binance, Okx, Deribit, Bybit, Bitmex, Synthetix, Bitfinex, and others.
We underline that short hedging is carried out using 1X leverage and serves to support the peg of the stablecoin in case ETH were to lose value too quickly.
If indeed the price of ETH falls, short positions become profitable, causing the peg stand to compensate for the erosion of the cryptocurrency.
This mechanism helps the financial stability of Ethena, which, although not exempt from major systemic implosion risks, can be considered “safer” than the Terra/Luna ecosystem (which fell into disgrace precisely because of its algorithmic component).
From a practical point of view, users can mint USDe simply by depositing staked Ethereum (stETH), without any lock-up constraints.
Subsequently, by staking USDe for sUSDe, users are able to effectively take advantage of the yield promised by the protocol. This kind of “Token Vault” model ensures that the staked USDe generate a yield by automatically compounding profits.
The innovation introduced by Ethena and its high profitability have allowed the protocol to grow significantly in recent months, reaching a total of over 100,000 active users and a TVL of 1.37 billion dollars, which corresponds to the supply of its stablecoin.
Obviously the intrinsic risks presented by Ethena are blatantly evident: it will be interesting to see if the protocol will be able to survive even in bear market conditions, or if it will meet the same fate as other similar ones that have tried in vain to beat the benchmark with promises of overly optimistic returns.
Ethena (ENA) token launch set for April 2nd with accompanying airdrop: check your eligibility
The strong attractiveness of Ethena that allowed the platform to attract billions of dollars in capital, is not only due exclusively to the high yield offered but also to the airdrop campaign that the protocol is carrying out and which is now almost coming to an end.
Yesterday in fact Ethena Labs announced the launch of their governance token ENA, with a distribution through airdrop scheduled for April 2nd.
Everyone who has supported the protocol up to now, by staking USDe and participating in the “shards” campaign, is eligible to redeem a portion of the 750 million ENA tokens put up for grabs by the project team.
This represents 5% of the total supply of the new cryptocurrency, which amounts to 15 billion tokens. Initially, the circulating supply launched on the market will be 1.425 billion tokens.
We expect a market capitalization of about 1 billion dollars at launch, which translates to a likely price of 0.70 per ENA.
We are excited to announce the first step in decentralizing the Ethena protocol with the launch of: $ENA pic.twitter.com/Xs7vvfmEEP
— Ethena Labs (@ethena_labs) March 27, 2024
To check their eligibility, users can visit the website claim.ethena.fi, currently inaccessible but will be open the day before the airdrop distribution.
It will be possible to claim for the next 30 days; all unclaimed tokens will then be used in a second season of incentives or reassigned to other eligible users.
Meanwhile, it is important to emphasize that those who unlock or sell all their USDe before the date of April 2nd, will lose the associated rewards.
As clearly described in the blog post announcing the launch of the ENA token:
“Any user who completely exits any of the incentivized pools by selling the system before the end of the shard campaign will lose all their shards. If you have repositioned between USDe, sUSDe, LP pool or Pendle, you will still receive your shards.”
It should also be noted that the first 2000 wallets by shard number will have 50% of the airdrop locked in vesting for a period of 6 months, with the other 50% sellable immediately.
All other users will not have any blocking constraints.
