@BillAckman@realDonaldTrump China is an exception from your analysis. No one company dare to invest one single dollar in the USA if their government decides not to engage with the USA
@YashengHuang They are the largest country in term of land size in the world, and they are the largest holder of nuclear bombs. They were one of the only two super power countries in the world. But again, I think their influence over both USA and China has decreased significantly de facto.
Understanding Ethena and USDe
Ethena is a decentralized synthetic dollar protocol built on Ethereum. USDe is its yield-bearing "synthetic dollar" that is fully backed and aims to be censorship-resistant, scalable, and stable.
Conclusion:
Ethena and USDe offer a compelling alternative to traditional stablecoins with the potential for high yields. The delta-neutral hedging strategy is innovative and, in theory, should maintain stability.
Lack of Transparency: The specific details of how Ethena manages its collateral and rebalances its positions are not fully transparent. This lack of transparency makes it harder to assess the risks fully.
Systemic Risk: Ethena's mechanism could amplify market volatility. If a large amount of USDe were suddenly redeemed during a market downturn, it could trigger a cascade of short position liquidations, exacerbating the downturn.
stETH De-Peg Risk: While rare, the liquid staking token (stETH) could deviate from the price of ETH. This could impact the collateral value and potentially destabilize USDe.
Centralized Exchange Counterparty Risk: Ethena relies on centralized exchanges for executing its hedging strategy. The failure of one of these exchanges could have significant consequences.