As of 12:00 on April 12 (UTC + 8), ENA's transaction volume on The First platform has approached 20 million US dollars. As a brand-new project that has only been launched for half a day, ENA's market popularity is evident, and its bright performance has also made it very popular in the discussions of social media and industry leaders KOL. As a token published less than half a month ago, it quickly broke into the top 100 in market value and was included in The First. What magic does ENA have to make many investment experts cast their favor on it?
1. What is ENA (Ethena)?
On April 11th, The First made an official announcement and will be available in the spot area on April 12th, 2024 at 00:00 (UTC + 8) ENA (Ethena), Ethena Labs is the creator of USDe, a synthetic dollar protocol built on Ethereum that provides a crypto-native solution for currencies that do not rely on the infrastructure of the traditional banking system, as well as a globally accessible dollar-denominated "savings vehicle" - "Internet Bond". Ethena's synthetic dollar USDe provides a crypto-native, scalable solution for funds realized through Delta hedging staking Ethereum collateral.
In short, Ethena is essentially an open-ended hedge fund that shorts an equal amount of ETH by offering $1.30 billion worth of USDe tokens as liquidity collateral to pledge ETH to create a portfolio with a delta of 0.
This allocation ensures that for every $1 change in the underlying value of Ethena's holdings, the net worth of its holdings fluctuates by $0, while receiving a benefit from the payment of funds on ETH pledges and short positions.
Due to the fact that staked ETH can be perfectly hedged with short positions of equivalent notional value, USDe can be minted at a 1:1 collateral ratio, making Ethena (ENA) capital efficient on par with dollar asset-backed stablecoins such as USDC and USDT, while also circumventing reliance on acquiring assets from traditional Financial Marekts, where asset publishers are subject to the regulations of the physical world.
So much so that Arthur Hayes, founder of BitMEX, wrote in praise of Ethena (ENA): "I believe Ethena can surpass Tether to become the largest stablecoin."
2. ENA token distribution plan
Total supply: 15 billion
Initial circulation: 14.25
Foundation: 15%
Investors: 25% (25% in the first year, linearly unlocked monthly thereafter)
Ecological Fund: 30%
Core contributors: 30% (Ethena Labs team and consultants, 25% unlocked in 1 year)
The tokens in Binance's lanuchpool are as follows:
Maximum supply of tokens: 15,000,000,000 ENA;
Initial liquidity: 1,425,000,000 ENA (9.5% of the maximum token supply);
Total mining amount: 300,000,000 ENA (2% of the maximum token supply);
Mining pool: BNB mining pool can mine a total of 240,000,000 ETHFI (80%), FDUSD mining pool can mine a total of 60,000,000
ETHFI (20%)
3. The advantages and risks of ENA
advantage
- Extensibility:
Ethena achieves scalability through the use of derivatives, allowing USDe to scale with high capital efficiency. Pledged ETH is perfectly hedged with equivalent short positions, so synthetic USD is only collateralized 1:1.
- Stability:
Ethena ensures that the synthetic dollar value behind USDe is maintained stable under all market conditions by conducting hedging operations immediately after the asset transfer.
- Anti-censorship:
By storing trustless supporting assets on-chain in a decentralized manner and managing them in a decentralized liquidity venue, Ethena has strengthened its ability to resist censorship.
risk
- Collateral decoupling risk:
Ethena uses a mix of LST collateral and plain Ether shorts, which optimizes basis trading against ETH, but also increases the risk of decoupling. If the LST collateral is decoupled from ETH, Ethena will face paper losses.
- Financing interest rate risk:
Although Ethena may show stunning returns in the early stages, the risk of inversion of financing rates remains. The number of days with negative financing returns has been reduced through strategies, but future financing rate inversions may still pose a threat to Ethena.
- Counterparty risk:
Although Ethena's design reduces the risk of deploying user collateral to centralized exchanges, in the event of an exchange going bankrupt, Ethena would need to adjust its hedging strategy to reduce capital exposure.
- General crypto risks:
Like many early crypto protocols, Ethena is exposed to potential dishonest behavior by teams and smart contract vulnerabilities. Although Ethena's OES escrow account policy helps reduce the use of complex smart contracts, thus reducing the risk of hacking.
4. New Disputes in the Stablecoin Market, The First Strict Selection of Ecology
In the current crypto market, with the passage of BTC ETFs and the sharp rise in the price of Bitcoin, we have witnessed the continued entry of traditional financial giants such as BlackRock into the market, which has not only boosted confidence in the crypto market, but also attracted a large amount of new capital. It is emerging and innovative crypto products that create huge demand and opportunities.
Although there has been the largest stablecoin Tether explosion before, ENA, as an innovative crypto product, combines the stability and decentralization of stablecoins to provide a new option to attract traditional and emerging investors. Stablecoins and other relatively stable and fully dollar-backed assets are one of the three opportunities in the field above 1 trillion dollars. This kind of crypto asset may be the emerging target that a large number of new funds in the market seek to invest in, which greatly meets the market's exploration demand for emerging and potential projects.
Based on its responsiveness to market demand and taking into account Ethena's risk management strategy and hedging mechanism, The First may also be optimistic about its long-term stable investment potential, especially in a dynamically changing market environment. Ethena's stability and anti-risk properties may make it a valuable tool for hedging market volatility and uncertainty. The First chose to launch ENA based on its sensitivity to market dynamics, its emphasis on user requests, and its commitment to financial technology innovation.
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