Summary
TLDR: Ethena’s USDe token offers steady yields to investors by using ether liquid staking tokens and short ETH perpetual futures positions to maintain a roughly $1 price. This strategy, known as a “cash and carry” trade, harvests derivatives funding rates for a yield.
Key Points
1. Ethena’s USDe token, also known as a “synthetic dollar,” offers steady yields to investors by using ether (ETH) liquid staking tokens such as Lido’s stETH as backing assets.
2. The USDe token is paired with an equal value of short ETH perpetual futures position on derivatives exchanges to maintain a “rough target” price of $1. This strategy is referred to as a “cash and carry” trade, which allows for harvesting derivatives funding rates for additional yield.
3. By utilizing this unique combination of assets and trading strategies, Ethena’s USDe token provides a stable investment option for those looking to earn consistent returns.