Pendle lifts cap for Ethena’s USDe, the protocol also extends into Aave

Ethena’s protocol is making more connections in the DeFi space, with a higher cap for USDe on Pendle. Ethena is seeking liquidity for its USDe on multiple DeFi protocols. Ethena’s earnings depend on the performance of Ethereum (ETH). 

Also Read: Ethena’s USDe shows trading disparity after staked token trades lower than $1

Ethena is a yield and DeFi lending protocol that offers as much as 27% APY for holding and staking USDe. In return for the staking rewards, holders of sUSDe take the risk of de-pegging from the dollar, as well as low liquidity. However, sUSDe is a tool to tap into the growth of ETH without personal exposure. 

Ethena’s USDe expands to multiple protocols

In a single day, Ethena’s USDe is now expanding into re-staking protocol Pendle, as well as the biggest DeFi lending protocol, Aave. Pendle announced it is raising the cap for USDe deposits up to $350M. The protocol promises annualized returns of 25.7%. 

Ethena is partnering with new protocols ahead of its Season 2 farming. Holders of USDe will be able to earn Sats points and earn a part of the Ethena airdrop fund. Sats, or Ethena points, can be earned daily through Mito protocol.

Thursday surprise – cap for @ethena_labs sUSDe (Jul 2024) has been lifted to 350M ????

???? 20x Sats/day + sUSDe yield
???? 25.7% Implied APY

GM. pic.twitter.com/9jLFDjskZW

— Pendle (@pendle_fi) June 27, 2024

Ethena is holding multiple campaigns while hinting at another ENA token airdrop. The loyal holders of the Ethena protocol will be able to provide liquidity in the USDe/USDT pair on the Mito decentralized protocol while earning Sats points. 

The expectation of points and a future airdrop is part of the loyalty program for holding USDe and not moving to other protocols. Ethena’s rewards are currently among the highest in DeFi lending and yield protocols.

Ethena is also growing more popular due to the relative stability and bullish outlook for Ethereum (ETH). For Ethena, the predominance of long positions on ETH decreases risk and helps it keep the stability of sUSDe and USDe. Since March, Ethena also includes Bitcoin (BTC) as additional collateral for its protocol. 

.@ethena_labs season 2 Airdrop (sats farming) is going to be loud ????

considering the fact that out of 35% of total supply allocated for Airdrops only 5% was distributed during season 1 Airdrop (shard farming)

.@MitoFinance is rewarding Stakers of $USDe – $USDT LP with 15x sats… pic.twitter.com/JtEWbitIfM

— Tega ????????‍☠️ (@0xtega_) June 28, 2024

Ethena adds USDe to Aave liquidity pairs

Ethena will start to grow its liquidity through Aave, the leading lending DeFi protocol. Aave, with its GHO stablecoin, is adding potential liquidity for tokens or other protocols. 

Ethena’s sUSDe can now be used as collateral on Aave V3, against any of the available stablecoins in the protocol. Aave V3 will thus offer a new mechanism to swap sUSDe for users that want to revert to another token. For long-term holders, liquidity injections will be translated to earning more airdrop points.

????@ethena_labs $sUSDe is now onboarded to @aave.

The parameters set for it are:
– Max LTV: 72%
– Liquidation threshold: 75%

You can now open a 3.4x leverage position through DeFi Saver, and earn higher yield and sats points, using the $sUSDe as collateral against any… pic.twitter.com/jD9xdBfdLf

— DeFi Saver (@DeFiSaver) June 28, 2024

The addition of USDe to decentralized trading on Aave happens just months after the protocol expressed worries about the risk profile of Ethena. The current addition is relatively cautious, aiming to have limited exposure. While Ethena has explained its risk profile, there are fears that it may follow the crash of Luna’s UST, especially if the stablecoin supply grows too fast.

MakerDAO is the biggest provider of liquidity for Ethena. Maker added $1B in DAI tokens to support USDe.

Also Read: 3 Crypto Airdrops To Watch This Week: Blast, Sealana, Ethena

For now, USDe production has stopped at $3.6B, while Ethena seeks more partnerships for its point program. USDe has low-liquidity pairs mostly on decentralized exchanges but is also among the assets on the Poloniex exchange. 

In June, USDe also joined as an asset on Bitget Global. The stablecoin will be used to provide liquidity and serve as a margin asset for perpetual swaps and futures. The partnership also added a new pair with USDT, securing an off-ramp for some USDe holders.

ENA still struggling to recover its previous price peak

Ethena is a protocol that awards special points, but it also has a native token, ENA. After the initial hype following an airdrop, ENA continued to slide and is now under the price levels right after launching. 

ENA trades at $0.56, down from a peak of $1.40. ENA faced price pressure from airdrop recipients and is still considered risky. 

Additionally, ENA traders noticed large-scale activity from whales, which may continue to pressure the price. 

ENA is still seen as a potential breakout asset, after reaching a local bottom. New talks of an airdrop and the spread of USDe will continue to draw attention to Ethena.

Cryptopolitan reporting by Hristina Vasileva