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Guy Young: Ethena - USDe Synthetic Dollar via Delta-Neutral Staked Ethereum Hedging
Media Type |
audio
Categories Via RSS |
Business
Entrepreneurship
Investing
Technology
Publication Date |
Oct 20, 2023
Episode Duration |
00:52:52

Stablecoins represent a safe haven against crypto’s volatility, allowing participants to remain in the market, without off-ramping to fiat. While the major stablecoins are centrally issued (e.g. USDT, USDC, BUSD), there is a pressing need for an algorithmic variant or a synthetic dollar asset. (DAI is somewhere in between since approximately 50% of its collateral is USDC). After Luna’s collapse, many jumped to point out its design flaws, yet such a concept would be crucial for crypto’s decentralisation and self-sustainability. Arthur Hayes proposed an interesting concept of NAKA synthetic dollar (NUSD), backed by Bitcoin and its inverse perpetual swap short. However, yield generation on $BTC is significantly lower than that of $ETH. A sustainable yield would help balance the cases in which funding rates would be negative (a minority in crypto).

We were joined by Guy Young, co-founder of Ethena, to discuss the stablecoin landscape and their synthetic eUSD, backed by staked ETH and its inverse perpetual swap.

Topics covered in this episode:

  • Guy’s background and founding Ethena
  • The history of stablecoins
  • The stablecoin trilemma and transparency
  • eUSD synthetic dollar mechanics
  • Ethena’s insurance fund and hedging
  • Minimising the impact of depegging
  • Leveraging centralised liquidity while maintaining self custody through MPC
  • User experience
  • Risk factors
  • CEX vs. DEX: liquidity, infrastructure, UX
  • The potential of fixed return rates
  • Supply & rates equilibrium

Episode links:

This episode is hosted by Felix Lutsch. Show notes and listening options: epicenter.tv/518

We were joined by Guy Young, co-founder of Ethena, to discuss the stablecoin landscape and their synthetic eUSD, backed by staked ETH and its inverse perpetual swap.

Stablecoins represent a safe haven against crypto’s volatility, allowing participants to remain in the market, without off-ramping to fiat. While the major stablecoins are centrally issued (e.g. USDT, USDC, BUSD), there is a pressing need for an algorithmic variant or a synthetic dollar asset. (DAI is somewhere in between since approximately 50% of its collateral is USDC). After Luna’s collapse, many jumped to point out its design flaws, yet such a concept would be crucial for crypto’s decentralisation and self-sustainability. Arthur Hayes proposed an interesting concept of NAKA synthetic dollar (NUSD), backed by Bitcoin and its inverse perpetual swap short. However, yield generation on $BTC is significantly lower than that of $ETH. A sustainable yield would help balance the cases in which funding rates would be negative (a minority in crypto).

We were joined by Guy Young, co-founder of Ethena, to discuss the stablecoin landscape and their synthetic eUSD, backed by staked ETH and its inverse perpetual swap.

Topics covered in this episode:

  • Guy’s background and founding Ethena
  • The history of stablecoins
  • The stablecoin trilemma and transparency
  • eUSD synthetic dollar mechanics
  • Ethena’s insurance fund and hedging
  • Minimising the impact of depegging
  • Leveraging centralised liquidity while maintaining self custody through MPC
  • User experience
  • Risk factors
  • CEX vs. DEX: liquidity, infrastructure, UX
  • The potential of fixed return rates
  • Supply & rates equilibrium

Episode links:

This episode is hosted by Felix Lutsch. Show notes and listening options: epicenter.tv/518

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