Ethena is a protocol that issues a synthetic dollar called USDe. Unlike USDT, which is backed by cash and cash equivalents in a bank, USDe is a crypto-native, decentralized stablecoin that maintains its peg through a specific strategy:
1. Delta-Neutral Hedging: Ethena takes a long position on Ethereum (ETH) staking assets and simultaneously opens a short position of equal size on ETH perpetual futures.
2. Yield Generation: The protocol earns two forms of yield:
· Staking Yield from the locked ETH.
· Funding Rate from the short perpetual futures positions (which is often positive in bull markets).
