USDE yield strategy explained: Ethena and FalconX execs break It down
Guy Young, founder of Ethena Labs, told David Brickell - Head of International Distribution at FRNT Financial on Crypto Options Unplugged by Deribit podcast that the platform uses BTC and SOL collateral alongside one short positions on both perpetuals and futures to generate yield.
When conditions shift, Ethena can rotate into USDtb — a Treasury-backed model — capturing legacy market rates. 'On rough numbers, the average APR you saw from SUSD in the last year was 18% for the average through 2024,' Young noted.
A unique aspect of USDE is its two-token model: the basic USDE for transactions and SUSD for staking. The design lets Ethena benefit when users don't stake. 'We did have periods where we're capturing 50%, 60% of the entire rate back to Ethena in the beginning,' Young said, adding that this margin is often used to amplify yield to stakers.
Ethena's B2B integration with centralized exchanges further boosts usability. 'All the centralized exchanges... just airdrop the implied return to their users on a daily basis with no withdrawal queue,' Young said, highlighting the daily liquidity advantage.
Another key insight is how USDE impacts exchange dynamics, especially on platforms like Deribit. 'You're importing higher funding rates from different exchanges onto Deribit... transforming [positions] from a negative carry position to one that's extremely positive,' Young explained.
Joshua Lim, global co-head of markets at FalconX, emphasized the trading benefits of yield-bearing stablecoins like USDE. 'It obviously is more efficient from a capital usage perspective... especially in underlying assets that are less actively traded,' Lim said. With cross-margining, traders can manage positions without sourcing collateral for each asset individually.
USDE is particularly useful as collateral across multiple exchanges. 'It's really interesting to think about USDE... to import risk that lives on centralized exchanges to DeFi,' Lim concluded.
As both trading firms and DeFi protocols converge, USDE is emerging as a bridge between yield, liquidity, and next-gen financial infrastructure.
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