Ethena Founder Reveals the Rise of Stablecoins

Ethena's USDe stablecoin has recently attracted widespread attention, with its market value skyrocketing from $140 million to $7.2 billion within a year, an increase of over 50 times. Recently, the founder of Ethena was interviewed, sharing the reasons behind the company's rapid rise and his views on the current market landscape.

The founder stated that Ethena has been preparing to enter the treasury bond company sector since the beginning of this year. They see that the traditional market's demand for such themes far exceeds supply, with a large amount of capital eager to invest in this area. From a macro perspective, there has been a bottleneck in the capital flow of altcoins in the cryptocurrency space over the past 18 months, and the industry needs to mature to break through its current scale and attract equity market investors who handle large-scale funds.

The total scale of the Ethena project is about $360 million, of which $260 million is cash. Compared to other similar projects, Ethena has a much higher cash ratio, aiming to introduce new cash to solve liquidity issues. The raised funds account for about 8% of the circulating market value and will be used for purchasing tokens in the open market, which is very prominent in the market.

The founders analyzed the appeal of Ethena and the operational mechanism of USDe. They focus on savings use cases, offering structurally higher yielding dollar assets. In 2024, the average annualized yield of USDe reached 18%, which is four times the interest income of certain competitors. Ethena profits by capturing the speculative premium of the derivatives market, which can be understood as providing financing for long positions in centralized finance.

Regarding market development, the founder believes that the capital pools for ETF and CME basis trading are completely different from those of the cryptocurrency market. Although the basis will compress over time, Ethena hopes to continuously grow in the process by reducing the capital costs of the cryptocurrency market to a reasonable level.

Regarding the "GENIUS Act", Ethena is collaborating with a certain federal regulatory bank to launch a USDtb that complies with the requirements of the act. They are adopting a dual-track strategy while retaining USDe, which is primarily aimed at the offshore DeFi market.

Regarding the future of the stablecoin market, the founder is cautious about new issuers entering the market and competing with existing giants. He believes that stablecoin products are highly commoditized, making it difficult for startups to differentiate themselves from established giants.

In the long run, the founder holds a cautious attitude towards Ethereum and other Layer 1 public chains, believing that they may be overvalued. He predicts that in the future, a few projects may be priced according to equity investment logic, decoupling from Layer 1.

Finally, the founder stated that Ethena has enormous market potential. Currently, the open contracts are about 110 billion to 120 billion dollars, with a yield of 15-20%. He believes that Ethena's market share in the derivatives market should reach 20-25%, which is 20 billion to 30 billion dollars, assuming the market does not grow significantly.