ENA Price Shoots 25% As Ethena Pitches Direct Competition to Tether

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As a seasoned researcher with years of experience in the cryptocurrency market, I have witnessed the rise and fall of numerous digital assets. However, the recent surge of ENA, the native cryptocurrency of Ethereum-based DeFi project Ethena, has caught my attention. This rapid growth is not just a flash in the pan but a testament to the power of innovation and competition in this dynamic industry.

The cryptocurrency called ENA, linked to the Ethereum-based DeFi project Ethena, has seen a significant increase in value because it’s now competing directly with Tether, a major player in stablecoins. This boost has pushed the price of ENA up by 25% to reach $0.35, and its market cap is now over $920 million. Additionally, the daily trading volume for ENA has jumped by 180%, reaching approximately $233 million.

Ethena’s USDe Stablecoin to Compete With Tether’s USDT

Within just a few months, Ethena Finance has rapidly expanded its USDe stablecoin to reach a market capitalization of $3 billion, making it the swiftest-growing DeFi project ever recorded. Noted crypto trader Eugene Ng Ah Sio predicted that Ethena will soon engage in direct competition with Tether and initiate its transformation from a decentralized finance (DeFi) stablecoin into a legitimate, widely recognized stablecoin.

Additionally, Ethena’s latest collaboration on the UStb stablecoin with BlockRock and Securitize reinforces its dominant market status, making USDe a strong candidate for leadership. The analyst points out that USDe excels in two key areas: its attractive value proposition and effective distribution strategy.

Looking at the USDe stablecoin value proposition, it allows users to deposit $1 and receive a delta-neutral position, split between staked ETH and an ETH short position while earning yield. As of now, the sUSDe offers the highest sustainable yields among stablecoins, anywhere between 10-13% APY. This has what helped Ethena’s USDe top emerge as the fastest-growing stablecoin achieving a total-value-locked (TVL) of $3.7 billion within 7 months of launch. The below image shows how USDe beats other DeFi products in terms of yield returns.

ENA Price Shoots 25% As Ethena Pitches Direct Competition to Tether

Furthermore, Ethena excels in the distribution aspect much like Tether’s USDT does, creating a substantial competitive advantage or “moat” for its DeFi product in the market. On another note, Bybit, one of the world’s largest centralized exchanges, has introduced automatic yield-earning functionalities for the USDe stablecoin within its platform. As a result, users can now effortlessly tap into an advanced form of stablecoin collateral without encountering any obstacles.

At present, approximately $38.6 billion worth of stablecoins are held on centralized exchanges. This is fifteen times the current circulation of USDe (US Dollar equivalent stablecoin). If 20% of this amount decides to generate a return of 5-10% by investing in USDe instead of keeping it, it could potentially increase USDe’s available market almost fourfold, according to Eugene Ng Ah Sio. Additionally, BitMEX co-founder Arthur Hayes has been advocating for this growth.

Fucking send it.

— Arthur Hayes (@CryptoHayes) October 11, 2024

USDe to Benefit from Fed Rate Cuts

At present, investments in Ethena’s USDe are providing a return that is 5-8% higher than Federal Fund rates. This advantage has drawn interest from yield-focused capital. With the Fed reducing rates by 50 basis points last month, this difference is expected to increase, making USDe an even more appealing choice for investors.

For the subsequent 24 months, it’s expected that the Federal Reserve will lower interest rates by approximately 2 percentage points, bringing them to a range of 3% – 3.5%. This reduction could spark beneficial indirect effects on lending rates: as markets grow, investor risk appetite returns, the need for borrowing increases, and lending rates tend to rise. When these elements interact, they generate a potent force that pushes spreads higher, emphasizing the genuine worth of Ethena’s product.

ENA Price Shoots 25% As Ethena Pitches Direct Competition to Tether

Commenting on the development, the crypto analyst wrote:

I’m quite certain that the resurgence of the yield premium will boost U.S. dollar growth again. Notably, this positive influence is clear and appealing to many investors in the market.

Additionally, the analyst posits that Ethena’s release of the UStb stablecoin could significantly boost the usage of USDe.

Given the current situation, it appears that the market is undervaluing USDe because there’s no compelling reason to hold any other stablecoin in crypto right now. This assumption holds if you trust exchanges like Binance and believe they won’t face significant issues (though even if they do, USDe remains unaffected since it’s fully backed by Bitcoin and stETH).

Over the past month, the ENA’s value has significantly increased by about 60%, marking a robust growth trend. Following its peak at $1.45 in April, there was a slight dip, but recent signs indicate a significant market turnaround starting now.

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2024-10-12 10:12