Ethena operates as a platform for synthetic stablecoins on the Ethereum blockchain. Additionally, Ethena aims to establish a USD savings mechanism for users worldwide, structured on a derivative basis. The project comprises two key elements: the USDe stablecoin and the Internet Bond product.
Essential information for their token is available on the MEXC Digital asset introduction page. Furthermore, we are listing (ENA/USDT – Trade it here) on the Innovation Zone! Check it out now!
The History of Ethena Labs
Ethena Labs was first launched in 2023 by entrepreneur Guy Young. It is emerging as a response to the shortcomings observed in traditional stablecoin. Recognizing the challenges posed by yield inflation and centralization, Young established Ethena intending to cultivate a transparent, dependable, and decentralized financial environment.
Furthermore, Ethena’s vision of revolutionizing digital currency has attracted considerable attention. It was able to draw investments from prominent entities within the crypto sphere. The platform secured $14 million in funding from venture capital firm Dragonfly Capital and an additional $6 million from Binance Labs, Bybit, Deribit, Gemini, Mirana Ventures, and OKX Ventures.
What is Ethena Lab’s USDe?
USDe, Ethena’s stablecoin, is engineered to furnish a stability solution that remains resilient and decentralized, devoid of control from central entities. Instead, it derives its stability from collateralized Ethereum-staked assets. Through transparent on-chain collateralization, it ensures stability by employing delta hedging derivative strategies for collateral assets.
This currency is tailored to deliver scalability and unrestricted utility within DeFi. This effectively bridges a significant void in decentralized finance (DeFi) and the wider financial landscape. Delta hedging, a risk management approach in derivative finance. It plays a pivotal role in balancing the collateral asset’s position to mitigate price volatility risks. Ethereum serves as the collateral asset in this scenario, with USDe maintaining its stable value through continual adjustment of the delta position. Furthermore, the development of USDe has enabled Ethena to introduce the Internet Bond. It is an innovative financial instrument crafted as a dollar-denominated savings mechanism.
What is Ethena Lab’s Internet Bond
The Internet Bond operates as a digital bond running on the Ethereum blockchain platform. It aids USDe in upholding a stable price through Ethereum staking and employing a two-way hedging strategy to sustain the price at $1. To uphold the peg for USDe, Ethena Labs executes hedging by establishing offsetting positions in the derivatives market or utilizing other financial instruments.
For instance, when users stake Ethereum to acquire USDe, Ethena simultaneously initiates a ‘short’ position on Ethereum with equivalent value. This entails betting on the price of Ethereum decreasing. If Ethereum’s price surges, the value of the collateral asset (Ethereum) securing USDe rises. However, the loss from the short position offsets this increase. Conversely, if Ethereum’s price drops, the loss from the decrease in Ethereum’s price is counterbalanced by the profit from the short position.
This approach ensures that any Ethereum price fluctuations are counteracted by the profit or loss from the hedging position, thus aiding in maintaining a stable value for USDe relative to USD. This mechanism enables USDe to uphold its pegged value, irrespective of market fluctuations.
Why Do We Need Ethena Labs?
Ethena Labs’ journey stems from the pressing need for a cryptocurrency-based form of stable currency capable of supporting a truly decentralized financial ecosystem. They aim to break free from the limitations and vulnerabilities inherent in traditional stablecoin models tethered to the conventional banking system.
By employing delta-hedging techniques to oversee Ethereum collateral, USDe strives to establish a stable, adaptable, and censorship-resistant means of exchange and value retention. This approach to crafting a synthetic dollar bypasses dependence on centralized financial structures and traditional stablecoin mechanisms. Consequently, it holds the potential to mitigate systemic risks within the crypto and DeFi realms while presenting a robust alternative to existing stablecoin frameworks.
How To Mint USDe
Minting USDe is actually quite simple. First, users deposit Liquid Staking Tokens (such as stETH, rETH) into the Ethena protocol in exchange for USDe. These tokens represent Ethereum that has been staked. When users create (mint) or redeem USDe, they will encounter slippage fees and transaction execution costs, which are integrated into the total transaction cost.
Upon receiving Liquid Staking Tokens from users, Ethena Labs proceeds to initiate a short order on derivative exchanges. This order does not employ leverage and is valued equivalently to the assets deposited into the protocol by users. The objective of this action is to mitigate the price risk associated with the deposited assets.
Where to buy ENA Token
You can find ENA Tokens here at MEXC! We are listing ENA/USDT in our Innovation Zone! Furthermore, you can receive 100% spot trading fee discounts while holding MX tokens. Get yours now!
What is the Price of ENA Tokens?
The ENA Token is currently trading at MEXC with a live price of $1.12. You can check the live price of their token right here!
How to buy ENA Tokens on MEXC
You can buy ENA Tokens on MEXC by following the steps:
- Log in to your MEXC account. Click on [Spot].
- Search “ENA” using the search bar to see the available trading pairs. Take ENA/USDT as an example.
- Scroll down and go to the [Spot] box. Enter the amount of ENA you want to buy. You can choose from opening a Limit order, a Market order, or a Stop-limit order. Take Market order as an example. Click [Buy ENA] to confirm your order. You will find the purchased ENA in your Spot Wallet.
You can find a detailed guide on how to buy ENA Tokens here.
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