Ethena Labs, a synthetic stablecoin protocol, has recently integrated with the centralized exchange wallets of Binance, Bybit, OKX, and Bitget. Starting from April 10, users who lock their USDe stablecoins for at least 7 days through these exchange Web3 wallets will be eligible for a 20% reward boost. The rewards, known as “Ethena sats,” can be converted to the native ENA token at the end of each campaign. To earn sats, users must deposit Ethena USDe stablecoins into their exchange wallets, connect to the Ethena decentralized finance (DeFi) protocol, and stake their holdings. Currently, the protocol has a total value locked of $2.274 billion and generates an annualized revenue of $178 million.
The ecosystem rewards offered by the protocol have gained significant attention and usage. According to blockchain analytics firm Lookonchain, the top 10 wallets have withdrawn a total of 37.5 million ENA ($51 million) and staked them since the start of Ethena Staking Season 2.
Ethena made headlines in the crypto world when it launched its USDe stablecoin, offering a 67% annual percentage yield (APY) on USDe within a month. Currently, the protocol provides an APY of 24% on its stablecoins. However, these high yields come with risks as they rely on trading income from complex Ethereum derivatives to fulfill promised returns.
Addressing concerns about the sustainability of its yields, Guy Young, the founder of Ethena Labs, dismissed comparisons to the failed Terra stablecoin, TerraUSD (UST), stating that Ethena’s yields are organic and sustainable. He emphasized that Ethena’s yields are derived from Ethereum consensus layer inflation rewards, execution fees paid to Ether (ETH) stakers, maximal extractable value fee captures acquired by Ether stakers, and trading income provided by Ethena Labs. The firm generates yield by opening short derivative positions when receiving long-position collateral assets for USDe minting, paying out the difference in value between the two positions to USDe holders.
In other news, Frax Finance has allocated $250 million of USDe to dive into DeFi liquidity.