19 Apr

Ethena (ENA), the governance token for the synthetic dollar network, is starting Friday AM UTC trade at $0.9632, down 33% from the previous week.

Even though this is one of the biggest weekly losses for a cryptocurrency in the top 100, ENA appears to be headed for a swift rebound. The price of it has increased by roughly 10% in the past day.

Comparing these numbers to the market leaders, they show a more erratic token. Ethereum (ETH) and Bitcoin (BTC) had declines of 12% and 9%, respectively.

In the past day, Bitcoin, the first cryptocurrency and the only one with a market capitalization of more than $1 trillion, saw a 5% recovery. The most significant blockchain in terms of commerce, Ethereum, gained almost 4% of its value over night.

Ethena: An Overview

The USDe token, a stablecoin that uses delta hedging to maintain its peg to the US dollar, is the hub of the Ethena ecosystem. The system holds perpetual futures shorting both assets, using Bitcoin and Ethereum as reserves, to offset volatility in their prices.

Staking is one of the most common uses for USDe. The official website states that there is approximately 160,000 users on the network with a total value locked (TVL) of approximately $2.4 billion. Right now, the yield per year is roughly 11.2%. Although the number represents a significant decrease from yesterday, when the yield was 17.2%, this is a rolling seven-day average.

But recently, a fresh analysis from CryptoQuant alerted USDe holders to the fact that Ethena's keep rate—the percentage of earnings earmarked for its reserve fund—must remain higher than 32% during a bad market in order to protect investors.

ENA's price chart shows a story of relative steadiness as the token holds support at a dollar since it started trading on April 2 at about 79 cents. On April 11, ENA reached its greatest point of $1.52; nevertheless, the current price indicates a 37% decline. Relative Strength Index (RSI) of 66 and rising suggests that purchasing is occurring right now among investors.

Ethereum (ETH) and Unbacked Stablecoins: Dangerous Area?

It seems that one of the most innovative and rapidly expanding cryptocurrency ecosystems in recent memory is the Ethena protocol. But many investors are leery about the prospect of a stablecoin that isn't backed by real money or cash equivalents.

This is due to the fact that the market has already witnessed a great deal with Terraform Labs's UST token, which was intended to remain at $1 using a burn/mint mechanism that involves minting $1 of the supposedly algorithmically backed UST and burning $1 of an unbacked token named LUNA.

Similar to USDe, UST offered enticing yields to investors via a lending mechanism known as Anchor. However, UST started to lose favor when yields started to drop.

May 2022 saw the token start to sway from the dollar. This sparked a self-fulfilling cycle in which more people fled, further destabilizing UST's pegging mechanism and plunging LUNA into a hyperinflationary spiral that didn't end until an astounding 7 trillion LUNA tokens were minted.

The fundamental cause of the industry's 2022 recession, which resulted in scores of bankruptcies throughout the sector, was the fallout from the crash.

From Slothana's Humor to Ethena's Uncertainty

There is still a great deal of uncertainty around Ethena's ENA and USDe tokens, especially in light of the recent memory of UST and the cautions in yesterday's CryptoQuant study.

Memes, on the other hand, might see some strong rallies soon. When the price-moving quadrennial halving event of Bitcoin takes place on Saturday, many are bracing for a surge. The day was chosen as International Doge Day by Dogecoin enthusiasts as well.

They chose April 20 because, for many, it represents fun and irreverence since it is also the day stoners celebrate their favorite pastime. And that day, a brand-new novelty currency on Solana is hoping to pump.

A slightly more stylish sloth than his predecessor, the well-known meme coin project Slerf, is Slothana (SLOTH), a sloth that despises work.

Slothana is one among the biggest admirers of 4/20, evident in everything from the wall clock to his satisfied smirk and burned red eyes.

April 2024, Cryptoniteuae

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