USDe Holders Should Monitor Ethena's Reserve Fund to Avoid Risk, CryptoQuant Warns
USDe stablecoin holders are advised to monitor the project's reserve fund to mitigate risks associated with potential negative funding rates, as per data provider CryptoQuant. Ethena Labs, the creator of USDe, offers a 17.2% annual yield to investors staking USDe or other stablecoins on its platform. The yield is generated from a tokenized "cash and carry" trade. CryptoQuant cautions that if funding rates remain negative for an extended period, Ethena's short positions will need to make significant payments to long position holders. Ethena has a reserve fund for this, but it needs to grow substantially if USDe's market cap continues to rise. Currently, the reserve fund of $32.7 million can only sustain funding payments if USDe's market cap is below $4 billion and $3 billion. The USDe market cap has reached $2.3 billion two months after issuance. The report also states that Ethena's keep rate, the revenue portion allocated to the reserve fund, must stay above a certain level to be sustainable.
