launch

Ethena Labs To Launch Synthetic USDe Stablecoin on Dec. 16

Published

1 week ago

December 13, 2024

Ethena Labs has announced the launch date of its synthetic USDe stablecoin on Dec. 16, 2024, as the token’s market cap reached $5.73 billion, an all-time high.

In a post on X, Ethena Labs, built on the Ethereum blockchain, announced a possible launch for its stablecoin USDe which is pegged to the U.S. dollar. It is mainly built as a yield-generating asset rather than an intermediary for a transaction, similar to Tether (USDT) or USD Coin (USDC).

Ethena Labs announcement of USDe stablecoin on X.

In contrast to the traditional fiat-reserve-backed stablecoins, USDe derives its yield based on the staking rewards of Ethereum (ETH) and keeps that reward away from the short funding rate for ETH. By doing so, it provides the holder an attractive annual percentage yield of up to 29%. This double-layered yield model makes USDe a high-reward financial instrument in the decentralized finance space.

Users have rapidly flocked to USDe, making it the third-largest USD-pegged stablecoin, overtaking DAI’s $4.7 billion market cap, but is still behind USDT and USDC, which have a market cap of $135 billion and $40 billion, respectively. According to CoinMarketCap, USDe’s trading volume increased by 24.27% in the past 24 hours to reach $171.09 million, indicating high demand for yield-bearing assets.

How sustainable is the USDe stablecoin model?

Ethena’s USDe has been compared to Terra-Luna, whose value also collapsed in 2022 because of its unsustainable growth model, by critics. Terra’s collapse was attributed to its struggles to maintain its peg with the U.S dollar in a bearish market, and experts fear USDe could suffer the same fate.

USDe employs a delta-neutral trading strategy, which balances Bitcoin (BTC) and ETH long and short positions to maintain its stability and yield. Ethena hedges the long stETH positions on centralized exchanges. In case a CEX goes down, the hedge may sit there; Ethena’s positions open to unrealized profits and losses. In a bull market, since the funding rate stays positive, this technique will work well; however, in bear markets, once the funding rate becomes negative, the yield can go down.

Every so often we see something new in this space. I often find myself on the mid curve for an extensive amount of time. I am comfortable here. That being said, there have been events in this industry I wish I was more curious about, there have also been events I definitely did…
— Andre Cronje (@AndreCronjeTech) April 3, 2024

Andre Cronje talks about Margin/Collateral model on X.

“So while things are going great now because market is positive and shorting funding rates are positive, eventually that turns, funding becomes negative, margin/collateral gets liquidated, and you have an unbacked asset. The counter to that is “law of large numbers”, which is pretty much the same as UST’s $1bn BTC fund etc. It works until it doesn’t“.
by Andre Cronje

Andre Cronje, the Chief Technology Officer of Fantom Foundation, for example, has highlighted that USDe’s model may only hold in bullish market conditions, and its resilience in a bear market is unproven, drawing parallels to the collapse of Terra-Luna. Secondly, given the growing efficiency of the crypto market, the profit margins, known as the basis spread, could narrow, reducing the profitability of USDe’s high yields in the long run.

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cryptocurrency

Here’s what HashKey’s 30% token allocation for staff could mean for investors

Published

2 weeks ago

December 5, 2024

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HashKey recently announced that it allocated 300 million tokens to team incentives with a 36-month unlocking period after the launch of its native token HSK. How does this impact investors?

On Dec. 5, HashKey posted an official statement that explains the allocation of HSK tokens for team members. The notice stated that HashKey allocated 30% of its 1 billion token supply for the internal team which follows an unlocking period that consists of a minimum 3-month lock-up period and a 35-month linear release.

“We’d like to clarify key aspects of HSK’s tokenomics and team incentives structure: HSK has a total supply of 1 billion tokens, with 300 million allocated for team incentives,” HashKey wrote in the firm’s official statement.

HashKey said that the 30% token allocation for team members was done to support the growth of HashKey’s ecosystem. The firm claimed that the tokens will be used for licensed exchanges, investment services, tokenization and infrastructure solutions.

Tokens can also be used for exchange fee payments, trading discounts and accessing community incentives. Therefore, current team members and former employees who hold HSK have to adhere to the firm’s token management policies, which regulate issuing, holding and selling tokens in accordance with the lock-up schedule.

Moreover, the Hong Kong-based crypto exchange clarified that employee resignation does not allow former team members to get an early or full token unlock. This is done to prevent former employees from cheating the system and selling tokens before the unlock period.

As previously reported by crypto.news, HashKey first opened deposits for HSK on Nov. 7 at 07:00 UTC, while spot trading for the HSK/USDT pair started on Nov. 26 at 10:00 UTC. The opening of HSK withdrawals occurred on the next day, Nov. 27 at 10:00 UTC.

In the initial announcement, the exchange explained that it had prepared a supply of 1 billion tokens, with 65% of the tokens being allocated to marketing and business development while 30% of the supply went to the HashKey team.

What does the 30% HSK allocation for team members mean for investors?

On one hand, allocation of tokens before a new launch is common practice in the crypto sphere. It is meant to incentivize team members and align their interests with the success of the project. That way, they will be more motivated to work harder to develop the project.

In HashKey’s case, the 36-month linear release period suggests the team is committed to the project’s long-term development. The unlocking period also reduces the risk of a pump-and-dump happening, because team members are unable to sell tokens quickly to gain profit within the period.

On the other hand, setting aside a chunk of the token supply for team members means that there are fewer tokens available in circulation. Usually when the portion reserved for insiders is too high, there will be higher pressure for insiders to sell tokens.

When the lockup period ends and tokens start unlocking, the team could still potentially sell their tokens to realize profits, which would in turn increase supply and potentially lower prices. Therefore, investors would need to keep an eye on the unlocking timeline and the project’s development milestones.

According to data from CoinGecko, HashKey’s platform token is down 9.4% in the past day. HSK is currently trading hands at $1.31 at the time of writing. In the past week, the token has gone up by nearly 20% and has a fully diluted valuation of $1.3 billion. Though, there is no information about how many tokens are circulating on the market right now.

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