[English Long Tweet] Is USDe Really Safe Enough?

Chainfeeds Guide:

Unless multiple "black swan events" occur simultaneously, USDe remains safe.

Source:

Author:

The Smart Ape

Opinion:

The Smart Ape: More and more people are starting to worry about USDe, especially after the recent depegging incident. This depegging triggered a lot of emotions, making it more difficult to remain objective. My goal is to provide a clear, fact-based analysis of Ethena. With all the information, you can form your own opinion, rather than following those who may have biases or hidden interests. On the night of October 10, USDe experienced a severe depeg. When I saw it drop to $0.65, I panicked myself. But in fact, the depeg only happened on Binance. On platforms with deeper liquidity like Curve and Bybit, USDe barely fluctuated, dropping to a low of $0.93 before quickly recovering. Many people compare Luna/UST to Ethena, but fundamentally, these two systems are completely different. First, Luna had no real revenue, while Ethena does, earning yields through liquid staking and perpetual funding rates. Luna's UST was backed by its own token $LUNA, which means it had no real support. When Luna collapsed, UST collapsed as well. Ethena, on the other hand, is backed by a delta-neutral position, not $ENA or any token related to Ethena. Unlike Anchor's fixed 20% annual yield, Ethena does not guarantee any returns; its yield rises and falls with the market. Finally, Luna's growth was unlimited, with no mechanism to slow expansion. Ethena's growth, however, is limited by the total open interest on exchanges. The larger it gets, the lower the yield, thus maintaining a balance in its scale. Therefore, Ethena and Luna are completely different. Ethena may fail, like any protocol, but it will not fail for the same reasons as Luna. Every stablecoin has risks, even $USDT and $USDC have their own weaknesses. It is important to understand what these risks are and how severe you think they are. Ethena relies on a delta-neutral strategy: holding a long position (BTC, ETH) through liquid staking or lending protocols, and a short position through perpetual contracts on CEXs. Personally, I think the biggest risk is if major exchanges (Binance, Bybit, OKX, Bitget) collapse or freeze withdrawals, Ethena will lose its hedge, leading to an immediate depeg. There is also funding rate risk. If the funding rate is negative for a long period, Ethena will burn capital instead of earning yield. Historically, the funding rate has been positive over 90% of the time, which can offset short periods of negative funding. USDe also undergoes rebasement; when the protocol earns yield, new tokens are minted. If the market pulls back or the collateral value drops, there may be a slight dilution effect. You cannot withdraw rebasement, so over time, this may lead to mild under-collateralization. Ethena also operates within a highly leveraged ecosystem. Large-scale deleveraging events, like the chain reaction on October 10, could disrupt hedges or trigger forced liquidations. Finally, all of Ethena's perpetual shorts are denominated in USDT, not USDe. If USDT depegs, USDe will also depeg. Ideally, perpetual contracts should be denominated in USDe, but convincing Binance to switch BTC/USDT to BTC/USDe is almost impossible. [Original text in English]