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Why All The Hype Around Ethena Labs?

Perhaps you can call it, dare we say, revolutionary.

Everyone is talking about Ethena Labs – a new project powering a shiny new “synthetic” stablecoin – USDe.

Why it matters: Because Ethena Labs just launched their governance token, ENA, which has catapulted to a top-75 token by marketcap (and growing). Meanwhile its stablecoin USDe is now the 5th-largest stablecoin by market cap.

The project is backed by Dragonfly Captial and Arthur Hayes – who has been conceptualizing Ethena for years. In a recent blog post, Hayes claimed that he believes it is “the crypto ecosystem’s best shot at providing a synthetic USD that rides on a public blockchain.” Put simply, he launched Ethena because he believes a synthetic stablecoin is critically important for the crypto ecosystem as it would never have to rely on banks a la Tether and Circle’s USDC. Critics, on the other hand, have predicted that it will eventually blow up like the Terra/Luna disaster.

Our Take

To fully explain Ethena Labs, it’s new token, ENA, and the stablecoin it synthetically creates, USDe, your handy CoinSnacks writers would seemingly need three more cups of coffee, another day of research, and a whole dedicated issue. It’s just that complex. And that in itself is flag-worthy.

The great investors tell us to never invest in a business you can’t understand. But that’s really not the point of why we’re writing this. Although we’re sure savvy investors and traders are taking advantage of Ethena’s current 35% APY, we’re highlighting this project because it stands the chance to fundamentally shift the fabric of stablecoins. Perhaps you can call it, dare we say, revolutionary.

Without getting into the expansive details (we suggest you read this and this for that instead), what’s clear is that the founders of Ethena have put a lot brainpower behind this. At first glance, it’s easy to write the company off as another Terra//Luna. But upon a deeper dive, you’ll discover a world of reasoning and transparency from the team.

Essentially, a bet on Ethena is a bet on a positive funding rate which is a bet on ETH (deflationary) outperforming the USD (inflationary) in the long run.
(Told ya – there’s layers to it 🙂 )

But for now, this is all you need to know:

This is a synthetic dollar which is much more independent from TradFi than something like Tether, that can provide predictably higher returns than simple staked ETH, that has a doxxed, experienced team, and will likely play the long regulatory game.

Ethena is For Us, By Us, aka FUBU.
Tether is For Us, By Them, aka FUBAR.

What’s Next?

Leading investor Arthur Hayes is pumping a $10 price point for ENA, a ~10x from here. While he’s obviously talking his book, deals like this one, plus the overall hype might just make it happen. Or… it could all spectacularly fail.