Since its inception, Ethena has ignited heated discussions regarding its success and
sustainability. The stablecoin has amassed nearly $2 billion, making it one of the top
revenue generators in the protocol sphere, excluding major layer 1s.
Ethena’s rise has triggered a credit rating showdown within DeFi. MakerDAO, a prominent stablecoin issuer, recently approved a proposal to accept $100 million of USDe as collateral to borrow DAI. MakerDAO eyes raising this limit to $600 million, with a staggering $1 billion on the horizon. Currently, USDe lending backs only 2% of DAI’s supply, yet these loans yield 36% annually, contributing to 10% of Maker’s potential 2024 revenues.
Some protocols perceive Ethena as a looming threat to DeFi’s stability. Aave, a leading lending protocol, is contemplating proposals to strip DAI of its collateral status. Rumors suggest strategic motives, with Aave possibly aiming to hold back competition from Ethena’s stablecoin, GHO.
Ethena’s profitable gains attract investors, but questions remain over its associated risks. Despite its profitability, can these risks be effectively managed? The true litmus test for Ethena and similar protocols may only arise in a bear market scenario.
