Key Highlights

• Ethena Labs recently declared the addition of Bitcoin as a backing asset to USDe.
• Ethena's available yields reflect the era when a 20% allocation to UST from Terra Luna seemed attractive.

Ethena Labs shared on its X account that Bitcoin is now a supporting asset for USDe. The team believes this step is critical in expanding USDe far beyond the current $2 billion supply. USDe is the project's synthetic dollar.

Ethena's team indicates that with the exponential growth of USDe post-launch, Ethena's hedges constitute around 20% of ETH open interest to date. The team explains that with BTC open interest valued at $25 billion available for delta hedging, the potential for USDe scaling has surged by 2.5 times.

Additionally, Ethena Labs points out that BTC's liquidity, now at $25 billion from $10 billion in just one year, is growing faster than that of ETH. This offers enhanced scalability and liquidity for delta hedging.

Ethena Labs also mentions that BTC offers superior liquidity and duration compared to liquid staking tokens. They express that as Ethena approaches $10 billion, it provides a more stable backing and a safer product for users.

Ethena Labs is focusing on expanding their BTC integration. The resemblance of Ethena's move to the time when a 20% allocation to UST from Terra Luna was appealing raises questions about the potential for Ethena to become Luna 2.0.

Could Ethena become Luna 2.0?

Central to the Ethena project is the ENA token, designed to enable a digital dollar platform on the Ethereum blockchain. This brings forth an innovative Internet Bond as a novel path for alternative banking.

By leveraging derivative markets and staked ETH, the Internet Bond provides a globally accessible dollar-denominated savings instrument independent of traditional banking systems.

ENA token's total supply is capped at 15 billion, with an initial issuance of 1.425 billion tokens. The distribution plan prioritizes ecosystem growth, core contributions, investor engagement, and foundation support.

Binance recently endorsed ENA as the 50th project on its Launchpool, allowing users to farm ENA tokens by staking BNB and FDUSD.

When comparing Ethena with Luna, the hype surrounding both projects sets the scene, with both projects enjoying community enthusiasm and a perception of innovation. Ethena aims to revolutionize the crypto space, evident in its impressive APY of roughly 37% alongside a substantial amount staked.

While some fear a Luna-like fate for Ethena, highlighting potential issues similar to what caused Luna's downfall, Ethena has been addressing these concerns by offering a sustainable APY and securing a steadfast staking pool.

With the high volatility of crypto markets, caution is crucial, and those interested in trading should be well-informed about the projects they venture into.