For most Web3 companies, a large part of aligning with the mission of decentralization is actually functioning as a decentralized entity. While it’s easy to proclaim you’re a fully decentralized organization, it’s much harder to run effectively as one.
Enter Ethena — a currency protocol operating on the Ethereum blockchain that aims to upend traditional financial structures by creating a financial system free of traditional banking institutions. To do this, Ethena offers a native cryptocurrency — USDe — that’s not backed by traditional banks but by decentralized finance (DeFi) mechanics.
Here we take a look at how Ethena is changing the DeFi game with its synthetic crypto dollar, how you can interact with it, and how you can immerse yourself in the world of other forward-thinking financial platforms through Spool.
A Quick Look At Ethena
Ethena functions predominantly through three main mechanisms, each with USDe at its epicenter. USDe is recognized as the first “Internet Bond” due to the staked Ethereum backing it as collateral.
This means the currency’s backing is fully visible on-chain. The yield from this combines with the funding and purchasing of the currency to create the “Internet Bond,” a Bond stabilized through USDe’s 1:1 peg with other stablecoins.
In other words, just as each USDC is backed 1:1 by a USD asset or one equivalent value, USDe is backed by crypto. If you think that’s game-changing tech, you’re right.
Through USDe, Ethena is powered in the following ways:
- USDe Purchasing: For many people, their first purchase of USDe is their introduction to Ethena. Users can purchase USDe directly through liquidity pools by swapping stablecoins or utilizing Ethena’s platform.
- USDe Redemption: When USDe is purchased, Ethena’s 1:1 peg for new USDe ensures one USDe is minted for every stablecoin being swapped.
- USDe Staking: In exchange for a seven-day staking period, users can stake USDe for sUSDe — a token that generates returns from the yield that Ethena’s backend collateral generates.
By pursuing yield and yield farming with Ethena and USDe, users are helping support the future of DeFi in what is truly a decentralized finance system. No longer reliant on traditional banks, investing in Ethena’s liquidity pools means investing in the possibilities of what DeFi technology can bring to financial systems across the globe.
But like any system rooted in cryptocurrency, it’s not without its risks.
Generally speaking, Ethena’s USDe is highly stable, though technical problems with smart contracts or volatility issues with its ETH backend collateral could potentially be cause for concern. Other risks include insufficient pool liquidity, negative funding rates, and potential hacks or bugs with custodial wallets.
Fortunately, there’s Spool, a platform that mitigates the risks of decentralized finance by helping users generate incredible yield on their assets.
Spool provides infrastructure that helps businesses and individuals create their own yield-generating mechanisms based on their personal risk tolerance. Spool’s automatic tech then manages users’ portfolios to generate the best possible yield from the array of DeFi protocols it interacts with.
Navigating Ethena Through Spool
While Ethena’s yield opportunities may fluctuate based on the crypto market’s performance, the platform generates some of the best returns through its ETH staking and backend hedging positions — the perfect platform for Spool to utilize.
For users interested in generating yield on their crypto assets, Spool’s forward-thinking technology allows users to automate their liquidity pool selections, set to their personal risk preferences and desired yield quantity.
By entrusting Spool with Ethena, the platform can instantly monitor and adjust your liquidity selections to align with your desired results — without you ever having to lift a finger. Instead of spending hours sifting through Ethena’s pools and trying to understand the yield metrics, Spool completes the work for you in a fraction of the time.
That’s the beauty of Spool’s innovation, which quite literally cracks the code on emerging DeFi protocols by understanding how to automatically balance and best deliver the types of yield users want.
Speaking of yield, another great way to participate in yield rewards is by becoming a SPOOL token ($SPOOL) holder — where 80% of all revenue generated through its protocol is redistributed back to the $SPOOL holders themselves.
The Next Evolution of DeFi Rewards
Despite the inherent risks of cryptocurrency investing, there’s no better way to beat traditional financial markets than through trusted crypto assets — the next wave of which appears to be regular yield distributions.
One of the easiest ways to start earning yield on your digital tokens is through Spool. Spool’s infrastructure is set up so that as soon as you become a $SPOOL holder, you can begin staking the token to generate yield. You’re activating your money to make you money — a passive income strategy not just for today but for the future.
Because, just like Ethereum, guess what else is deflationary?
That’s right, $SPOOL.
So whether you’re liquefying your crypto into an Ethena DeFi pool or staking your digital assets for the long haul with $SPOOL, Spool has the potential to push your positions to their maximum potential.
Give Spool a try and watch the possibilities of your yield initiatives start paying you dividends now and way into the future.
