Breaking Crypto News – The Role of Ethereum ETF Hype in the Ethena USDe Growth
Breaking Crypto News – The market cap of Ethena‘s synthetic dollar cryptocurrency, USDe, has risen above $2.6 billion due to excitement about the SEC possibly authorizing a spot ether ETF. This has coincided with an increase in Ethereum open interest among exchanges and higher permanent funding rates overall.
Before Bloomberg ETF analysts Eric Balchunas and Jeff Seyffart raised their odds of the US Securities and Exchange Commission approving a spot ether ETF to 75% on May 20, the market capitalization of USDe was circling about $2.45 billion. According to data from CoinGecko, since then, the market capitalization of USDe has increased by more than $100 million in US dollars, reaching $2.64 billion at press time.
USDe Market Cap is Steadily Increasing
Ethena’s USDe staking income is starting to look more appealing, which is contributing to the USDe market cap increase. USDe’s staking yield, according to Ethena’s webpage, has increased significantly from 27.55% on May 14 to 35.9% at this time.
The benefits of staking Ethereum and the financing rate Ethena receives for initiating short derivative positions account for Ethena’s staking yield. Funding fees are paid to people holding short positions, such as Ethena, by traders who have gone long in futures derivatives markets on exchanges. Therefore, when open interest and perpetual funding rates rise, so does Ethena’s USDe staking yield that depositors get.
The increase in both open interest and funding is and will continue to be a large tailwind for Ethena – average perpetual funding rates across the market moved from <7% (on May 20) to over 35% in less than eight hours,
Guy Young, Ethena Labs
FAQ
What is a Staking Yield?
Staking cryptocurrency is keeping a specific number of tokens locked up in order to maintain the functioning of a proof-of-stake network. By validating transactions and adding new blocks to the blockchain, token holders on the network are entitled to a staking reward, also known as a “yield.”
What is Ethena Finance?
By offering a crypto-native stablecoin solution that makes use of intricate financial techniques to preserve currency stability and generate yields, Ethena Finance is establishing a distinct niche for itself in the DeFi market.
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