USDe Stability Check: Will Ethena Survive Funding Rate Challenges?

• Ethena’s USDe protocol demonstrates robustness via adequate reserve funds amid market challenges.
• Negative funding rates pose a significant risk to USDe’s stability and reserve fund sustainability.
• Monitoring Keep Rate is vital to fortify USDe’s resilience against funding rate fluctuations.

Ki Young Ju, an On-chain analyst, recently posted insights on X platform regarding the stability of Ethena’s synthetic dollar protocol, USDe. According to Ki Young Ju’s analysis, the protocol’s reserve fund appears capable of weathering challenges akin to the 2022 FTX/LUNA scenario, as long as its market cap remains below $3 billion. 

$USDe stress test:

Their reserve fund can handle prolonged negative funding rates like in 2022's FTX/LUNA scenario as long as its market cap stays below $3B (currently $2.4B).

The protocol is robust if sufficient reserve funds relative to its market cap. pic.twitter.com/dQLZOqo2o5

— Ki Young Ju (@ki_young_ju) April 17, 2024

Currently, the market cap stands at $2.4 billion, indicating that the protocol’s strength lies in maintaining an adequate reserve fund relative to its market capitalization. This highlights the protocol’s robustness…

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