Bitwise President Explains Why He’s Curious About Ethena
The latest stablecoin hype train is underway in the form of Ethena (USDe), and Bitwise President Teddy Fusaro is taking an interest.
In an April 10 Twitter thread reviewing the protocol’s mechanics, Fusaro noted that USDe “may be the fastest-growing USD-denominated asset in the history of crypto.”
“USDe operates v similarly to an ETF,” he wrote.
Bitwise itself owns many crypto funds, including a new and popular Bitcoin spot ETF, though it has no investments in Ethena.
On Amtrak to Boston. Had a min to look at Ethena & USDe which may be the fastest-growing USD-denominated asset in the history of crypto.
I'm tweeting about structure/mechanics here as I personally understand it. Not a Bitwise or personal investment.https://t.co/xNQHvyIBZd
— Teddy Fusaro (@teddyfuse) April 10, 2024
“There’s a ‘fund’ (protocol) that accepts contributions from ‘APs’ & then issues ‘units’ (or USDe tokens),” Fusaro continued. “The protocol then invests in a pre-determined portfolio.”
Ethena’s portfolio fundamentally consists of four assets: Bitcoin (BTC), Ethereum (ETH), ETH liquid staking tokens, and Tether USDT. Those reserves are counterbalanced by equally weighted short perpetual futures exposure, creating a “delta neutral” portfolio that maintains the same dollar-denominated value over time.
But there’s a catch: The reserves generate yield through their staked ETH and futures interest—and that yield is paid out to all holders of USDe. Then, holders can stake their USDe themselves to receive sUSDe and receive even more yield.
“At scale, this interest can be massive.” Fusaro wrote. “It is a gargantuan total addressable market.”
By comparison, traditional stablecoins like USDT and USDC are backed by centralized reserves primarily consisting of cash and
