Cryptocurrency Visionary Charles Edwards Equates Ethena to Luna’s Cycle

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In a captivating and insightful revelation, Charles Edwards, the visionary behind Capriole Investments, has stirred the cryptocurrency realm with his intriguing perspectives. Edwards, a prominent figure in the crypto community, likened the cryptocurrency Ethena (ENA) to “the Luna of this cycle.” Intriguingly, he noted a fundamental variance – the economic foundations of ENA are thought to be sustainable for the long haul.

Edwards delved deeper into the subject matter, observing, “It’s 100% collateralized and the yield fluctuates concerning market dynamics. These are a couple of aspects Luna fell short of.” He drew attention to a fascinating detail: during its pinnacle, Luna’s valuation eclipsed ENA’s present market cap by as much as twenty times. Yet, he offered a word of wisdom, “ENA isn’t without risks, custody and execution risks are prominent.”

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Debuted on April 2, ENA has undergone an astronomical ascent from barely $0.30 to an impressive $1.45. This robust rally is principally due to a clever strategy devised by Ethena labs featuring an enhancement of their rewards program. This newly launched “Season 2” program offers users an appealing 50% reward boost for holding their ENA tokens for at least a week, design to enhance user engagement and breed loyalty while nurturing a durable ecosystem for Ethena platform.

An extraordinary feature of this burgeoning ecosystem is the swift expansion of its stablecoin, dubbed USDe. In an astounding development, the supply growth of USDe has surpassed other established competitors like USDT, USDC, and DAI, amassing a supply of $2 billion just over 100 days.

However, the high yields associated with the project, originating from the staked Ethereum and derivative markets, have undoubtedly ignited skepticism among many crypto experts. Andre Cronje, the founder of Fantasy, along with others, has questioned the long-term viability of these high-yield returns, currently the best in the crypto industry.

Taking the discussion of risk factors into account, the comparisons of ENA to Terra Luna (LUNA) are noteworthy. As Edwards pointed out, despite the fact that ENA is not entirely without risk, experiencing a fate similar to Luna seems unlikely. Nevertheless, potential investors must be mindful of the associated risks tied to ENA.

Delving deeper down the rabbit hole of risk, a fascinating take on derivatives traders’ behavior comes courtesy of CL (@CL207) from eGirl Capital. She astutely observes, “Ethena seems to be giving those unfamiliar with derivatives trading a tough time understanding that derivatives traders are, quite endearingly, ready to shell out inflated APRs of over 50% to secure a position.”

Interestingly, in the last cycle, crypto traders were so eager that Bitcoin futures soared to over 50% APR. She adds, “In the first 50 days of 2021, the market collectively paid a staggering $2.4 billion in funding rates. By the end of 2021, the amount paid was comparable to the GDP of a moderately sized nation.”

Offering a detailed analysis of the risks highlighted by Andre Cronje is Monetsupply.eth (@MonetSupply) from Block Analitica. His examination unravels some key potential pitfalls, including the risks involving incorrect quotes, Liquidation, Spread, Collateral Ratio, and Custody, among others.

Wrapping up his argument, MonetSupply suggests that despite these risks, strategies of over-collateralization on platforms such as Morpho, supported by a substantial proof of liquidity, serve as formidable countermeasures to potential risks.

As of reporting, ENA was trading at a strong $1.329.