Funding Risk (slow bleed)
stable
USDe stays “delta neutral” by shorting BTC/ETH perpetual futures. When funding is positive,
shorts earn money. When funding turns negative for long stretches, Ethena has to pay funding
out of the backing. If that persists, backing per USDe can start quietly eroding instead
of instantly blowing up.
Defense (Ethena claim):
reserve fund to absorb negative funding, rotation into cash/T-bill-like yield when funding is weak,
and the view that BTC/ETH funding tends to revert positive over time.
Liquidation Risk (collateral vs hedge)
stable
Ethena sometimes posts staked ETH / LSTs as collateral while shorting ETH/BTC perps.
If that collateral suddenly trades at a steep discount vs the asset they’re shorting,
centralized exchanges can start forcibly trimming Ethena’s hedge (“incremental liquidation”),
which can realize losses and weaken backing.
Defense (Ethena claim):
very low leverage, multiple exchanges instead of one, 24/7 human monitoring, and historically tight
stETH:ETH spread since ETH withdrawals went live.
Custodial / Settlement Risk
trust-based
Assets sit with “off-exchange settlement” custodians (like Copper ClearLoop) instead of directly
on Binance/Bybit. If a custodian halts withdrawals, fails operationally, or stalls settlement,
Ethena’s ability to move funds, settle PnL, or fulfill redemptions could get disrupted even if
assets are legally segregated / bankruptcy-remote.
Defense (Ethena claim):
diversify across multiple custodians, keep assets in segregated structures, settle PnL frequently
so no single exchange ever “owes” too much at once.
Exchange Failure Risk
event-driven
The hedge itself runs on centralized exchanges. If a major venue blows up mid-move (FTX moment),
Ethena can temporarily lose that hedge and any unsettled PnL on that venue. In a violent market,
that leaves them exposed to raw crypto direction until they re-hedge somewhere else.
Defense (Ethena claim):
don’t leave backing assets on-exchange, settle PnL often, and spread exposure across multiple
exchanges so any one failure is survivable.
Backing Asset Risk
low % exposure
Part of USDe’s backing is staked ETH derivatives (stETH, mETH, etc.) and some stables,
not just “pure cash.” If an LST depegs, gets slashed, or becomes illiquid exactly when
it’s needed, backing quality drops even if the peg number still looks fine.
Defense (Ethena claim):
keep LST share relatively small (~6%), diversify instead of betting on only one LST,
and rotate out of anything that starts to look stressed.
Structural Sustainability Risk
monitor
The model works long-term if perp shorts usually earn and negative stretches can be bridged
by staking yield, cash yield, and an internal reserve. If that regime breaks for long enough,
it doesn’t instantly implode — the backing just bleeds below $1 per USDe unless yield comes back
or new capital steps in.
Consideration:
this behaves more like an actively managed macro trade than a boring “digital dollar.”
Insurance funds have to actually be deep and liquid, not just promised.