About Ethena Labs

Bhim5551

"Ethena Labs is an unreleased project. The project differs from the CDP model by offering an incremental neutral support model that sets it apart from competitors. Through this model, the project will use LSD as collateral to create a spot long and 1x short position on an exchange, thereby mitigating the volatility of collateral. USDe will be more efficient as it will provide a 1:1 collateral ratio and generate funding fees from the incremental neutral model in addition to LSD yields. However, users will not be affected by ETH price fluctuations.

My thoughts on $USDe are as follows:

1. Innovation: Among all existing projects, Ethena is the only one offering an innovative solution. I believe the incremental neutral model can successfully address some key issues of LSD-backed stablecoins, such as capital efficiency, lack of scalability, and stability anchoring.

2. Capital Efficiency: Due to the incremental neutral model, the protocol does not require over-collateralization to maintain stability, allowing it to offer a 1:1 collateral ratio. In terms of capital efficiency, $USDe outperforms competitors.

3. Stability Anchoring: $USDe will use incremental neutral positions to maintain stability anchoring. Theoretically, ""creating a spot long and 1x short position on an exchange"" will always protect the value of collateral. However, it's important to see the practical results.

4. Exchange Medium: With a 1:1 collateral ratio, USDe can address the scalability issues of existing crypto-backed stablecoins. Therefore, USDe can serve as an exchange medium between platforms with deep liquidity.

5. Strong Value Proposition Compared to Competitors: USDe has two major unique advantages in the market that differentiate it from competitors. Firstly, it can offer a 1:1 collateral ratio, making it more attractive to users. Additionally, apart from LST yields, USDe will provide funding fee income, which is more competitive among existing projects.

6. User Adoption: Like any innovative project, $USDe will face some skepticism from the community as the Delta-Neutral approach is not widely known. Therefore, Ethena will need some time to educate users and test this approach.

7. Unaffected by ETH Volatility: Since the collateral deposited is used to build hedging positions, users will not be exposed to the risk of ETH price fluctuations. Risk-averse users may see this as a benefit, while ETH maxis may view it as a drawback."