Ethena Labs Divides Opinion as High Yield Stirs Memories of Terra

Ethena Labs has become a controversial topic among crypto traders due to its high-yield offering and perceived similarities to the failed Terra ecosystem. Ethena’s USDe stablecoin provides a yield through a tokenized cash-and-carry trade, but there are concerns about counterparty risk and the potential for a reversal in funding rates. The protocol has seen a significant increase in total value locked since its public introduction in February, but skeptics worry that the high yield reflects high risk, similar to what happened with Terra’s UST stablecoin. Ethena founder Guy Young dismisses comparisons to Terra, stating that USDe is fully backed and collateralized, unlike UST which relied on the fluctuating value of the LUNA token. However, Young does acknowledge that a bear market could lead to a decrease in USDe supply and a need for adjustments in the protocol’s strategy. Overall, Ethena Labs’ approach has divided opinions in the crypto community, with supporters attracted to the high yield and critics cautious about the potential risks involved.