- Ethena hit the ground running immediately after launch, with ENA gaining 99% in the past week for a $1.9 billion market cap, just eight days since its airdrop to USDe holders.
- While some like BitMEX founder Arthur Hayes believe ENA will shoot to $10, other experts have expressed caution, noting that many of the assumptions that Ethena is built on won’t always hold.
The current bull market has seen several crypto projects launch to great success in a few months—Dogwifhat launched in November and is now worth $3.4 billion, while Book of Meme launched on March 14 and is worth $705 million. However, few projects have skyrocketed as fast as Ethena’s ENA.
Ethena Labs airdropped ENA tokens on April 2 to holders of the USDe DeFi stablecoin, with top exchanges like Binance and Bitget listing it upon launch, as Crypto News Flash reported. Since then, it has become one of the best-performing tokens in the market and boasts a $1.96 billion market cap.
At press time, ENA trades at $1.37, gaining 8.3% for the day, 48.5% in the past week, and 99.9% since launch eight days ago.
As the graph above shows, ENA spiked at launch to hit a high of $1.225, before shedding a third of its value two days later. Since then, it has been on an uptrend, which is more remarkable when you consider that this was a period in which most cryptos were on a downturn.
Is It Worth Betting on ENA Amidst Concerns and Confidence?
Ethena’s ENA has divided expert opinion, with some industry leaders throwing their weight behind it while a few others question its longevity. But first, what is Ethena?
Well, Ethena is an Ethereum ecosystem that issues a synthetic dollar protocol, offering a crypto-native solution for money, devoid of traditional finance. Its stablecoin, USDe, bills itself as a synthetic dollar that’s censorship-resistant, scalable, and stable. It generates yield for holders through staking Ether and delta hedging derivative instruments.
To get a better understanding of the intricacies of USDe and its yield mechanisms, below is founder Guy Young on Laura Shin’s Unchained podcast. Andre Cronje, the co-founder of Yearn and Fantom, also has a great breakdown of the project.
Wondering how @ethena_labs‘ USDe works?
Hear it from its founder @leptokurtic_ pic.twitter.com/EOvAdmYsyi
— Laura Shin (@laurashin) February 21, 2024
USDe is the lifeblood of the ENA ecosystem. From this perspective, investors can be optimistic as its supply has shot up from $146 million at the beginning of February to $2.25 billion at press time. Its DEX activity has also skyrocketed—on Uniswap, its trading volume is at an impressive $3.456 billion.
Some like Arthur Hayes, the founder of derivatives giant BitMEX have also backed the project to keep rising. Hayes says that ENA will hit $10, which would be a 630% rise from the current price. It’s, however, worth noting that Hayes is one of the investors in Ethena.
José Maria Macedo, the founder of Delphi Digital, a crypto and blockchain incubator, is a big fan of the project, stating:
USDe will become the largest stablecoin outside of USDC/USDT in 2024. Ethena will become the highest revenue-generating project in all of crypto.
However, some, like Cronje, question Ethena’s yield dynamics. He notes that one of the biggest risks is that the Ethena team seems to assume that the yield on USDe is always guaranteed. However, he says that the project is sound and if the risks are understood by users, can be one of the industry’s trailblazers.
In his newsletter, Cronje wrote:
This is an ambitious project, they should be commended on their idea and honesty about the risks facing holders. The risks are plentiful and holder get compensation to bear these risks.
