New Stablecoin Offers Eye-Popping Yields, But Critics Worry of Repeat Collapse
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Ethena Labs launched a new stablecoin, USDe, offering a very high 27.6% annual yield, raising concerns it may not be sustainable like Terra's UST collapse.
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Critics are worried yields could invert, costs could exceed earnings leading to losses. Previous similar projects have failed this way.
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Risks include negative funding rates, liquidity constraints that could cause the stETH peg to break in a bear market.
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Ethena argues they have thoroughly assessed risks, use insurance funds to manage negative funding rate risk.
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Despite risks, USDe adoption growing rapidly, backed by major investors and exchanges like Binance and Gemini.