- Athena Labs has built-in Bitcoin as a backing asset for USDe stablecoins.
- The founding father of CryptoQuant argued that the choice could not profit BTC holders.
- He remembered the potential danger of contagion much like that witnessed at UST Terra Luna.
Ki Younger Ju, CEO of information analytics platform CryptoQuant, expressed concern over Athena Labs’ choice to again its lately launched USDe stablecoin with Bitcoin.
In an notification on Thursday, Athena Labs revealed that Bitcoin (BTC) has been built-in as a backing asset for USDe. Because of this Bitcoin now serves as collateral to maintain the artificial greenback stablecoin pegged to the US greenback.
The staff emphasised that the change to BTC-backed place tokens permits USDe to increase considerably from its present provide of $2 billion. Nonetheless, Ki Younger Ju argued that the choice could not profit bitcoin holders. He expressed concern, evaluating it to a possible danger of contagion much like that witnessed with the ill-fated UST stablecoin Terra Luna in 2022.
Specifically, the Terra staff repeatedly bought bitcoins to help UST amid a lack of $1, which drastically affected the value of bitcoin. The founding father of CryptoQuant fears {that a} related state of affairs may very well be repeated with USDe.
Younger Ju additional questioned how Athena Labs plans to take care of a delta-neutral technique for Bitcoin throughout bear markets. He identified that he holds spot BTC and quick BTC in bull markets.
An business professional identified that the USDe stablecoin seems to be a Centralized Finance (CeFi) initiative run by a hedge fund, which he says is simply efficient in bull markets. Younger Ju is nervous in regards to the stability of USDe’s peg if their algorithm fails throughout bear markets.
The USDe has seen exceptional growth in current months. It grew to become the fifth largest USD-pegged stablecoin with a market cap exceeding $2 billion. USDe provide has elevated by 156% within the final 30 days alone. It presently has an annual proportion return (APY) of 37.1% and has peaked at over 60% APY.
As well as, Athena Labs launched a governance token, ENA, which presently instructions a market valuation of $1.61 billion.
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