USDe Holders Should Monitor Ethena's Reserve Fund to Avoid Risk, CryptoQuant Warns

In the event of negative funding rates, Ethena’s current reserve fund would only be sustainable if USDe’s market cap was below $4 billion.Total Supply of USD-Pegged Stablecoins Hit $128B: Glassnode

Ethena Labs, the firm behind the USDe stablecoin, currently offers an annual yield of 17.2%, a rolling average over the past seven days, to investors that stake USDe or other stablecoins on the platform. The yield is created from a tokenized “cash and carry” trade that involves purchasing an asset whilst simultaneously shorting that asset to rake in funding payments.

Ethena has allocated capital to a reserve fund for this purpose, but that fund will have to grow significantly if the market cap of USDe continues to increase.funding rates following the Merge upgrade and the FTX collapse, a CryptoQuant report suggests that the current reserve fund of $32.7 million would only be able to sustain funding payments if USDe’s market cap were below $4 billion and $3 billion respectively. The market cap of USDe has risen to $2.3 billion two months after being issued.

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