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Ethena is a synthetic USD stablecoin protocol, where the synthetic USD (USDe) provided by Ethena will be the first anti-censorship, scalable, and stable native cryptocurrency solution achieved through Delta hedging collateralized Ethereum assets.
Essentially, Ethena operates as an open hedge fund, using liquidity provided by pledged ETH tokens as collateral to short an equal amount of ETH. This creates a portfolio with a delta of 0, ensuring that the net value of Ethena's assets remains stable regardless of fluctuations in the underlying asset value. Additionally, profits can be generated from ETH collateralization and financing from its short position.
To protect users' collateral, Ethena (ENA) utilizes an off-exchange settlement (OES) solution, with funds held by reputable third-party custodial institutions. Only account balances are mapped to centralized exchanges (CEX) to provide trading margins, ensuring that funds never enter centralized exchanges.
While currently using pledged ETH as collateral, Ethena (ENA) may further incorporate BTC as collateral for larger-scale expansion. However, this may dilute the returns on USDe, as BTC collateral does not generate collateralization returns. |
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Post time 11-4-2024 13:14:10