Crypto Ecosystem

Could Ethena be the next Terra?

, April 11, 2024

In this week’s crypto highlights, we explore the price movements of ETH, TON, AAVE, and UNI. Additionally, this recap includes other notable industry news items that occurred over the last seven days. Without further ado, let’s dive into the latest market developments.

Market spotlight: Ethena’s TVL surpassed $2 billion

After the launch of its USDe “stablecoin” in February, Ethereum-based protocol Ethena experienced a massive rally, and was one of the top newsmakers:

  • Ethena’s total value locked (TVL) increased by almost 10 times, surpassing $2 billion.
  • USDe skyrocketed to become the fifth largest “stablecoin” by market cap (although the Ethena team prefers the term “synthetic dollar”)
  • Ethena’s native token, ENA, has more than doubled in price, since its airdrop on April 2. ENA holders can also lock their tokens to receive a 50% rewards boost.
  • MakerDao raised DAI’s debt ceiling to $1 billion, to allocate funds to the USDe and sUSDe markets.
  • Ethena announced the integration of its platform with Binance, ByBit, OKX, and Bitget, empowering their users to lock USDe for a 20% reward boost.

Doubts about sustainability

According to Ethena’s website, the existing sUSDe annual percentage yield (APY) is 37.1%, which is a significant increase from the initial 27.6%. While seeing such an alluring yield opportunity, some crypto enthusiasts remain skeptical about Ethena’s sustainability. For instance, Andre Cronje, a DeFi architect who created and Keep3rV1, shared his concerns about using perpetual contracts and yield-based collateral within Ethena’s framework.

Since the USDe launch, many have referred to Ethena and USDe as the next potential Terra and UST, which experienced a death spiral in 2022, and evaporated more than $60 billion in value in a few days. Furthermore, TardFiWhale, an on-chain investigator who predicted Terra’s collapse a few months before it happened, demanded $1 million to expose critical flaws in Ethena’s approach, highlighting the severity of the issues.

However, while Terra’s founder, Do Kwon, gained a reputation for disparaging the project’s critics, the Ethena team appears to be more transparent about its potential risks. On its website, Ethena disclosed threats associated with the protocol, which include but are not limited to, funding rates, custody, and liquidations. 

When addressing comparisons with Terra, Ethena’s founder, Guy Young, said that USDe’s APY is set by the market, not internally, referring to Anchor’s 20% for Terra’s UST. In addition, he stated that UST was essentially backed by LUNA token, while Ethena is “fully collateralized by Ethereum, Bitcoin, and corresponding hedges.” Despite this, Young confirmed that Ethena may show a much more modest performance in bear markets.


In general, Terra flashbacks remain strong within the crypto community, which is a good thing, as it matures the industry, and could help dodge unfavorable events in the future. UST had a market cap of $18 billion at its peak, and USDe’s current $2.3 billion might not look like a significant threat. But as Ethena grows, it raises risks of a potential contagion to the wider crypto market in the case of a negative scenario, since collateral might be used to preserve the peg of USDe. 

As for now, Ethena leaves more concerns than confidence, but it’s only a few months old. Perhaps, as the protocol survives more market events, this perspective could change. What remains clear is that focusing on the project’s yield may have significant consequences, and users must first get acquainted with the project’s risks before blindly jumping into it.

Other noteworthy market events

Solana continues facing troubles with transaction processing

While some Solana community members were mocking Ethereum supporters, the Solana network has been facing the highest transaction failure rate in its history.

According to a Dune dashboard, on March 4, over 75% of all “non-voting” Solana transactions failed. Many Solana users were vocal on social media about transaction issues within the ecosystem, but Helius CEO Mert Mumtaz claimed that the vast majority of these failed transactions were “bot spam.” He stated that 95% of failed transactions were initiated by trading bots, which “fail in arbitrage.” 

However, Mumtaz added that because of the volume of spam activity, increasing the commission wouldn’t help Solana users speed up transaction processing, and will most likely lead to a “waste of money.” The Solana community continues waiting for a fix, since the rate of failed transactions currently remains around 60%.

Solana CEO Anatoly Yakovenko vented his frustration on social media about addressing congestion bugs on the network. Solana developers said that a much-anticipated fix is scheduled to roll out around April 15. Consequently, various Solana-based projects postponed their launches.

In a move to accelerate transaction processing on Solana, validators also endorsed a proposal to reduce the latency of consensus “votes.”

Ripple plans to launch its own stablecoin

Ripple unveiled its strategy to introduce a stablecoin pegged to the U.S. dollar by the end of this year, aiming to challenge the dominance of Tether’s USDT and Circle’s USDC in the market.

Developers assure that Ripple’s stablecoin will be fully backed by U.S. dollar deposits, U.S. Treasuries, and cash equivalents held at U.S. banks. 

To build trust, Ripple intends to undergo third-party audits monthly, providing attestations to validate its reserve holdings. The stablecoin will be rolled out on both the XRP Ledger and the Ethereum blockchain, utilizing the ERC-20 token standard for enhanced compatibility and functionality.

Restaking platform EigenLayer launched on the Ethereum mainnet

On April 9, the restaking platform EigenLayer and its data availability layer, EigenDA, were launched on the Ethereum mainnet. According to EigenLayer’s blog post:

  • Restakers can now delegate their entire stake to their preferred operator.
  • Operators can opt in to run an actively validated service (AVS). 
  • AVSs can enroll for the beta version of EigenDA. 

Notably, the mainnet launch didn’t include in-protocol payments for AVSs and slashing penalties.

According to DeFiLlama, EigenLayer maintains around $13.5 billion in total value locked (TVL), being the second-largest DeFi protocol in terms of TVL. 

One sentence news

  • Multiple Chinese asset managers indicated their interest in providing spot Bitcoin exchange-traded funds (ETFs) through subsidiaries in Hong Kong.
  • PayPal announced the launch of its international payments service Xoom, expanding the use of its PYUSD stablecoin.
  • Japanese firm Metaplanet followed Microstrategy’s steps, purchasing $6.5 million worth of Bitcoin as a core treasury asset, and faced a 90% surge in its stock price in two days.
  • Solana NFT marketplace Tensor launched TNSR, its native governance token.
  • BlackRock added major U.S. banks, including Citi and Goldman Sachs, as participants of its spot Bitcoin ETF. 
  • Blockchain-based social media protocol Friend.Tech saw a resurgence in activity and TVL in anticipation of the token launch.

Notable price performances

Ethereum has been slightly outperforming Bitcoin

The ETH price recently managed to outperform Bitcoin’s on a weekly basis, temporarily reaching $3,600. This helped the ETH/BTC pair bounce off its multi-year lows, but the market is currently retesting an established support line (white line).

The weekly timeframe provides mixed signals. The RSI formed a bullish divergence, suggesting that Ether may continue outperforming Bitcoin in the short term. In turn, the ETH/BTC market is on the verge of the death cross, hinting that Bitcoin might soon dominate in terms of price performance. 

If ETH/BTC sustains above the support line, it could try to explore the 0.06 level. If failed, the following targets for bears could be 0.046 and 0.038 levels.

TON surpassed Cardano by market cap

The TON price experienced a more than 35% weekly surge, helping Toncoin become the ninth-largest digital asset by market cap, surpassing Cardano (ADA). One of the catalysts could be the allocation of one million TON to reward participants who pass verification through palm scanning. 

Another driver could be rumors that Tether (USDT) might arrive on the TON network, as Telegram’s CEO Pavel Durov and Tether’s CEO Paolo Ardoino will share the stage at the Token2049 conference in Dubai. The event will take place on April 18-19.

The Volume Oscillator (VO) hints that the recent price jump was accompanied by decreased volume, while the RSI suggests a potential bullish divergence formation. As a result, the asset might try to retest the middle of the Bollinger channel on a daily chart, which currently acts as dynamic support.

AAVE price took advantage of the “fee switch” initiative

The AAVE price jumped by over 15% in a few days, reaching the $131 resistance area. This rally occurred amid discussions regarding the activation of a “fee switch.” 

In DeFi protocols, a “fee switch” refers to a feature or mechanism that would facilitate the distribution of fees collected from transactions or other activities to token holders. According to Marc Zeller, Aave Chan Initiative founder, there could be more details about a potential fee switch activation next week.

However, AAVE failed to sustain above $131, causing a price correction. The daily MACD suggests that the path of least resistance could be downward. But a daily chart hints at a potential formation of an ascending channel, indicating bulls might soon make a comeback.

UNI price dropped following SEC’s lawsuit

The UNI price lost almost 15% of its value in a day, after the U.S. Securities and Exchange Commission (SEC) sent Uniswap a Wells notice, a notification that the regulator is planning an enforcement action. Following this event, Uniswap Labs founder Hayden Adams said he is “not surprised” and “ready to fight.”

The asset price approached the oversold level on a daily timeframe, and reached the 0.786 Fibonacci point. The lower border of the Bollinger channel on a daily chart was broken, suggesting that the asset may soon experience a rebound to $10.70.

Tune in next week, and every week, for the latest CEX.IO crypto highlights. For more information, head over to the Exchange to check current prices, or stop by CEX.IO University to continue expanding your crypto knowledge.

Disclaimer: For information purposes only. Not investment or financial advice. Seek professional advice. Digital assets involve risk. Do your own research.


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