What is Ethena (ENA)? Information about ENA Token?
What is Ethena (ENA)? Information about ENA Token?
Recently, Binance announced the listing of Ethena (ENA) as its 50th Binance Launchpool project. So, what is Ethena (ENA)? Let's explore ENA Token.
Table of Contents
What is Ethena (ENA)?
Ethena (ENA) is a synthetic currency protocol built on the Ethereum platform, aiming to provide a native cryptocurrency solution independent of traditional banking infrastructure. It also offers a savings instrument denominated in dollars, called the ‘Internet Bond’, for users globally.
Ethena’s synthetic currency, USDe, is committed to providing a stable, censorship-resistant native crypto currency that can scale by treating Ethereum staked assets as collateral. USDe is fully transparently collateralized on-chain and can be freely utilized within DeFi.
The stability of USDe’s value is ensured through the use of delta hedging derivative positions for collateral assets held by the protocol.
Interface ethena
The ‘Internet Bond’ will leverage yields from staked Ethereum as well as the spread/profit from perpetual and futures market settlements to create a native on-chain crypto ‘bond’ that can act as a dollar-denominated savings instrument for users in jurisdictions that allow it.
An “Internet Bond” can function similarly to U.S. Treasury bonds in traditional financial markets. It provides backbone collateral assets for DeFi as an uncensorable and yield-bearing asset, as well as a transactional currency on centralized exchanges.
What Problem Does Ethena Solve?
Ethena is developed to address one of the most significant and apparent needs in the cryptocurrency space. In DeFi, the goal is to create a parallel financial system; however, stablecoins, considered one of the most important financial tools, still rely on traditional banking infrastructure. Ethena is developed to provide a scalable native crypto currency, aiming to enable the building of a truly decentralized financial system.
Stablecoins are susceptible to influence by traditional financial institutions.
We can observe that popular stablecoins in the crypto market are vulnerable when traditional financial institutions encounter issues. The case of USDC is a prime example, as the company managing USDC deposited $3.3 billion in Silicon Valley Bank. When this bank encountered issues, the stablecoin immediately lost value.
Eight billion people lack access to USD-denominated savings instruments.
While U.S. citizens have access to the $30 trillion U.S. government bond market, individuals in the rest of the world lack access to this market.
Ethena’s Solution
Mint Usde on ethena
USDe is activated by Ethena Labs through risk-mitigated on-chain immediate settlement of collateral-backed tokens during the minting process. Therefore, USDe provides the following benefits:
Scalability is achieved by using derivative tools without over-collateralization, as LST used as collateral can be hedged with equivalent short positions.
Stability is achieved through unleveraged short positions executed for LST immediately upon USDe issuance to ensure a neutral position.
Censorship resistance is achieved by separating collateral assets from the banking system and storing collateral assets on decentralized platforms, easily auditable on-chain.
Highlights of USDe
On-chain security of USDe
Ethena distributes collateral assets to a diverse set of MPC custody contract types on-chain. On-chain collateralized assets ensure independence from centralized servers, thus minimizing counterparty risks.
Seamless connectivity with major liquidity venues to manage underlying risks and optimize capital while users retain full control over monitoring USDe.
Unlocking leverage
USDe generates fixed returns for users through staking rewards from LST and funding rates from short positions.
Ethena will continue to allow minting of USDe based on LST to maintain long-term exposure to Ethereum while providing liquidity for USDe.
No liquidation risk
USDe is issued based on a delta-neutral mechanism rather than a debt position mechanism (CDP) like other algorithmic stablecoins, so users holding USDe will not face liquidation risks.
Ethena’s Operational Model
USDe Issuance Mechanism
Users deposit various types of LST (stETH, rETH) into Ethena to receive USDe. Slippage and execution fees will be applied to users’ mint or redeem USDe transactions. After receiving LST from users, Ethena will open an unleveraged short position on derivative exchanges with the equivalent value of assets deposited by users into the protocol.
Why Does Ethena Open a Short Position?
As we know, LST (stETH, rETH, WBETH) are used as collateral to mint USDe. However, LST are altcoins with high volatility, so Ethena needs to open short positions to hedge against price volatility for these assets. If the value of LST on the market drops significantly, the profit from the unleveraged short position will offset the price decrease of these LST, ensuring their value remains unchanged.
sUSDe
After receiving USDe, users can stake this stablecoin to receive sUSDe. The profit for users holding sUSDe will come from two sources: Staking rewards from LST and funding rates from the short position. The reward mechanism for sUSDe holders will not require users to perform any operations because sUSDe is an accumulative value token. The value of sUSDe compared to USDe will gradually increase over time.
Related: Binance Announces Listing of Ethena (ENA) on Launchpool
What is ENA Token?
Basic Information
Token Name: Ethena
Symbol: ENA
Blockchain: Ethereum
Token Standard: ERC-20
Contract: To be announced
Token Type: Governance
Total Supply: 15,000,000,000
Circulating Supply: Updating
ENA Token Allocation
Allocation
Founders: 30%
Investors: 25%
Reserve: 15%
Ecosystem Development: 30%
ENA Token Release Schedule
Vesting
ENA Token is used for what?
Voting for project governance proposals
ENA Token Storage Wallet
You can store this token in the following wallets: MetaMask, Trust Wallet, …
Where to Buy and Sell ENA Token?
ENA Token will be listed on the Binance exchange at 15:00 on April 2, 2024.
Development Team
Updating
Investors
Investor
In July 2023, Ethena raised $6.5 million from investors such as Dragonfly Capital, Deribit, OKX Ventures, Gemini, Bitmex, Huobi, Delphi Digital, GSR.....
