A crypto token aimed at replicating a common hedge fund trade is attracting billions of dollars in investments and creating a huge buzz in the market. However, the project, known as Ethena, is also fueling skepticism about the sustainability of its returns, which currently stand at around 37%.
Ethena and its USDe token, a so-called synthetic dollar, achieve their goal through the cryptocurrency version of basis trading that exploits price differences between spot and futures markets. The strategy, known in cryptocurrencies as cash-and-carry trading, has proven particularly profitable recently as token prices continue to soar higher and funding rates – the interest that bullish traders pay to secure a futures contract -To hold position – shoot up.
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