🔥Can Ethena increase by another 15 times? Fool’s explanation + mechanism interpretation + income calculation about $ENA Let’s take a look at Fomo first: Ethena was born for us, created by us USDT is made for us, but made by them. Ethena is For Us, By Us. Tether is For Us, By Them app.ethena.fi/liquidity

▶️Introduction and popular explanation Ethena is a synthetic dollar that creates zero-delta portfolios, ensuring that the net asset value does not fluctuate with the market. The period delta combination is: user’s mortgaged assets + short order formula: user’s mortgaged assets + short order = USDe

▶️How does it make money? Its income mainly comes from two sources: ✅ETH and interest-bearing ETH staking income. That is, staking Ethereum to obtain consensus and execution layer rewards (about 3.5% APR). ✅ Earnings from Perp Swaps. That is the funding rate earned by short ETH in the bull market (ranging from 8%-147%) as shown in the figure below. The original LRT route: ETH → LSD assets (stETH) → LRT Ethena route: ETH→LSD assets (stETH)→(stETH+ short order=USDe)→sUSDe On the contrary, when the user withdraws the LSD assets, the short order will be closed simultaneously. Why are the profits so high? 1⃣Everyone is doing LSD and LRT this year. It will be a great year for staking, and the staking returns will be high. Deposit LSD and other assets to earn staking income; 2⃣The capital rate in the bull market is high, ranging from 20 to 50 points. Traders make good decisions, eat well and work well.

▶️How does ENA work? 1⃣Minting Currently, the protocol accepts stETH Lido, Mantle mETH, Binance WBETH and ETH. After entering, Ethena automatically sells ETH/USD perpetual swap contracts to lock the USD value of LSD assets. At the same time, the protocol mints the amount of USDDe equivalent to the USD value of the short perpetual short hedge. example: 1. Deposit 1 stETH, worth $10,000. 2.EthenaSell 10,000 ETH/USD / perpetual swap = 10,000 USD / 1 USD contract value. 3. Receive 10,000 USDe because Ethena sold 10,000 ETH/USD perpetual swap contracts. 2⃣Destroy Burning Deposit USDe into Ethena. Ethena will then automatically cover part of its ETH/USD perpetual swap position, unlocking USD value. The protocol will then destroy USDe, and the total amount of USD value unlocked - execution fee = ETH or interest-bearing asset returned to you. example: 1. Deposit $10,000. 2.EthenaRepurchase 10,000 ETH/USD / Perpetual Swap Contract = 10,000 USD / 1 USD Contract Value 3. Receive 1 stETH = 10,000 * $1 / $10,000 stETH/USD minus execution fee

▶️How big can ENA get? Market Size? The supply limit of USDe depends on the total open interest of ETH futures and perpetual swap contracts (USDT is backed by 130B, supported by legal currency). The current total open interest of ETH is approximately US$8.5 billion. Therefore, under current market conditions, it is impossible for Ethena to occupy the number one position. But one growth point is BTC and SOL. Among them, BTC is $31 billion. If ENA includes BTC and SOL, the combined open interest of BTC and ETH is approximately $43 billion. Its scale will be further expanded. It depends on how Ethena does it, maybe it will be rolled out step by step. How successful it can be depends on how bold it is.

▶️How much money can you make? What are the specific benefits? How do you value it? Valuing (part1) The benefits of the StableB protocol fundamentally come from seigniorage. It is the difference between the cost of currency creation and the value of the currency and the physical goods purchased. Currently, Ethena is distributing the benefits generated by supporting sUSDe assets, and the benefits generated by supporting unstaked USDe assets will be sent to the insurance fund after this sharding event, and these benefits will belong to the protocol thereafter. I estimate that in the long run, 80% of the benefits generated by the protocol will be accumulated to the staked USDe (sUSDe), and 20% of the benefits will be accumulated to the Ethena protocol. Assume ETH staking benefits — 4% APR. ETH perpetual swap funding — assume 20% APR. Here is a simple version of the formula Total benefits = USDe supply * (ETH staking benefits + ETH perpetual contract swap funds) Ethena protocol annual income = total benefits * 20%

▶️How much money can you make? What are the specific benefits? How do you value it? Valuing (part2) Based on other protocol projects, DAI, CRV, LQTY, and Frax are compared as follows The median FDV is 1.7b, and the average is 2.07B. The annualized returns are 13M and 72M respectively. The horizontal axis of the second picture is the USDe supply (Billion). The vertical axis is the FDV/Rev multiplier. So with 100B and 70 multipliers, its income is about 720B-1440B. Referring to Ondo, ondo generated 9M income with 6B FDV, FDV/income = about 630 times (this round of bull market premium is overestimated) Based on the data launched this week, the yield generated by 820M assets this week is 67% APR. If the ratio of sUSDe/USDe is 50%, the annual income is about 820M*0.67*0.5=270M.

▶️How much money can you make? What are the specific benefits? How do you value it? Valuing (part 3) Here comes the important part! If you are conservative: 270M*100=27B If you are more aggressive (benchmarking the multiplier of ondo): 270M*630=173B And the current FDV on CoingeCko is 11.3B Does this mean that there is still 2.5-15 times of room in this bull market?

▶️ Is it reliable? What are the risks? Don’t just FOMO! to be continued...

▶️ Is it reliable? What are the risks? Don’t just be FOMO! 1. On-chain contracts hedge risks and may not be able to perfectly hedge long positions (many CEX investors are investors, but they are just grasshoppers on a rope anyway) 2. Centralization risk. If the money is on Cobo and other platforms, will it escape? Then look for the divine fish and the divine fish @Cobo_Global @bitfish1 3. Hedging cost + operational difficulty (but don’t worry too much about this, after all, so many CEX are investors in ENA) 4. The bear market cannot maintain a high APY, and I don’t know if I can survive the next bear market (don’t worry about it, circle B takes one day and one year on earth, seize the day, if you have wine now, you will get drunk now!) 5. The trader’s strategy involves the risk of loss when opening a perpetual contract position on CEX, as well as the risk of misjudging the stablecoin supply and demand trend, long but the stablecoin supply business is stagnant; (then open more wages)