Ethena and Tether Forge Symbiotic Stablecoin Liquidity/Yield Model, Driving Growth in DeFi Perpetuals Market

Ethena has quickly emerged as a major player in both DeFi and CeFi, with its stablecoin USDe surpassing $5 billion in supply in under 18 months, demonstrating robust price stability even in volatile market conditions. ParaFi Capital’s analysis highlights that USDe maintained its dollar peg and processed $3.3 billion in redemptions, while offering yields (12.3% APY on sUSDe) that outperformed major competitors. Ethena’s dynamic yield strategies leverage perpetuals and positive funding rates. In a recent update, Ethena founder Guy Young clarified that Ethena and Tether are not competitors but complement each other. About 70% of perpetual contracts are denominated in USDT, and each USDe minted via perpetuals drives significant new demand for USDT. Young emphasized that this creates a ’barbell strategy’ for the market, where Tether provides maximum liquidity and Ethena offers attractive yields, shaping the industry’s future structure. He noted that Tether doesn’t need yield products, as traders already pay high rates to use USDT as collateral. While Ethena’s growth outlook remains strong, potential risks include negative funding rates affecting USDe supply and exchange risks on hedged strategies.