Ethena, a popular crypto project, has seen a significant increase in its USDe yield-bearing token, attracting $1 billion in new investments over the past month. This growth has pushed the token’s market capitalization to $3.44 billion, just 5% below its all-time high of $3.6 billion in July.
The USDe token offers a 29% annualized yield to investors, rebounding from a period of lower yields when crypto markets experienced a correction. The token is marketed as a “synthetic dollar,” with its value pegged to $1 and backed by bitcoin and ether, paired with short perpetual futures positions on various exchanges. This unique strategy allows investors to earn yields when perpetual funding rates are positive.
During a period of negative funding rates in August and September, investors withdrew $1.2 billion from the protocol. However, with the recent surge in crypto markets, particularly with Bitcoin hitting new all-time highs, Ethena’s yield-bearing token has regained popularity among investors.
In addition to the positive market conditions, Ethena has other growth catalysts on the horizon. Aave, a major decentralized lending platform, has added the staked USDe token as a collateral asset, enabling users to borrow against the tokens while earning yields. This integration is expected to create a significant demand for USDe tokens in the coming weeks.
Furthermore, Ethena plans to share protocol revenues with governance token (ENA) holders, following the approval of a governance initiative by the project’s risk committee. The proposal, put forward by crypto trading firm Wintermute after Donald Trump’s election victory, suggests that the DeFi sector may benefit from more favorable regulations under a Trump presidency.
Overall, Ethena’s recent growth in inflows and the promising developments on the horizon indicate a positive outlook for the project amidst the ongoing crypto rally and high yields in the market. Investors are increasingly turning their attention back to crypto assets, and Ethena’s yield-bearing token seems to be well-positioned to capitalize on this growing interest.