Ethena Labs’ founder, Guy Young, addressed the concerns surrounding the USDe stablecoin yield, stating that it is a natural sign of the industry’s recovery following the collapse of the Terra-LUNA ecosystem. In an exclusive interview with Cointelegraph on February 22, Young explained that the concerns arose after the USDe stablecoin launched on the public mainnet on February 19. The USDe stablecoin, which is based on the Ethereum blockchain, currently offers a 27.6% annual percentage yield (APY) according to Ethena Labs’ website.
The high yield offered by USDe raised concerns about the protocol’s economic sustainability, as it exceeded the 20% yield previously offered by Anchor Protocol on Terra’s UST before its collapse in May 2022. The collapse of Anchor Protocol resulted in the loss of billions of dollars in value within a few days. Unlike Anchor Protocol, Ethena Labs’ Young emphasized that the yield generated by USDe is publicly verifiable and is derived from staking returns and shorting Ether perpetual futures contracts.
Jae Sik Choi, an analyst at Greythorn Asset Management, highlighted that the artificially inflated yield offered by Anchor Protocol was unsustainable, unlike the dynamic yield promised by USDe. It should be noted that Ethena Labs’ USDe is not the only product offering high yields, as Pendle Finance’s staking pools, such as the ezETH pool, offer a fixed annual percentage yield (APY) of 41% for staked Ether.
Overall, the concerns surrounding the USDe stablecoin yield reflect the industry’s maturation and recovery from past setbacks, while Ethena Labs aims to provide a sustainable and transparent yield generation mechanism through its synthetic dollar.