Concerns raised by developer about UST being replaced by Ethena

Developer Andre Cronje recently expressed doubts about whether Ethena will become the next UST stablecoin. In a post on X, Cronje compared Ethena (USDe) to the notorious UST stablecoin. He analyzed the structure of perpetual contracts and pointed out a critical vulnerability in the system, which relies on income-generating assets like staked Ethereum as collateral. Cronje’s concerns about the lack of transparent risk mitigation strategies in complex financial products, similar to those that led to Terra’s downfall, raise a red flag about the sustainability of such products.

Ethena Labs founder Guy Young, also known as Leptokurtic, responded to Cronje’s criticism and acknowledged the validity of the concerns raised. Ethena Labs recently announced the launch of its governance token, ENA, and the expansion of its yield-earning stablecoin, USDe. Additionally, Ethena initiated an airdrop of 750 million ENA tokens, allowing users who participate in the Shard Campaign to claim free tokens. The number of tokens received will be proportionate to the shards or points accumulated prior to April 1.

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