Choosing the right staking platform is critical to maximize your Ethena $ENA returns. To do so, you need to select a provider that fits your investment goals and risk tolerance.
Ethena Labs offers a synthetic dollar that functions as a decentralized form of money within the crypto ecosystem. Its USDe token is backed by a Delta-neutral position of short futures positions and liquid assets.
How to get started
The platform allows Ether holders to earn passive income on their holdings through staking. However, staking is complex and requires a nuanced understanding of the underlying technologies and risks.
Staking platforms use alternative mechanisms to support the Ethereum $ENA protocol’s Proof of Work consensus, such as tokenization and participation in liquidity pools that simulate staking on other blockchains. Choosing the right one is essential to optimizing your staking investment.
For example, you can take your raw logs stored in an S3 bucket and run them through Athena using a lambda function. This will clean the data up and transform it into a more usable format that can be queried quickly. This is useful for ETL use cases, as well as Machine Learning use cases. While Athena regularly clones and backs up your files to tape, you should always save a copy of your data somewhere else. This way, if you accidentally destroy or lose your file, you can retrieve it.
Setting up a wallet
A wallet is the place where your cryptocurrency lives. It’s a good idea to use one that offers security, ease of management and customer support. There are many wallets available, so make sure you do your research and pick one that meets your needs.
Unlike fiat-backed stablecoins, commodity-backed or smart contract-backed algorithmic stablecoins, Ethena stands out for its synthetic dollar model and community-driven governance. This is why the project’s USDe stablecoin has gained rapid adoption since its launch despite its exposure to derivative markets and higher risk than other stablecoins.
To ensure the stability of its peg to the US Dollar, USDe mints and redeems tokens in exchange for liquidity staking on LST (stETH, rETH, WBETH). These liquid assets are then used by the protocol to open unleveraged short positions on derivative exchanges, hedging against price volatility for its underlying backing assets. The profit from these trades is then paid out to USDe holders as yield.
Staking your ETH
To earn rewards, you must have a minimum deposit of stETH (and rETH or WBETH for multi-staking). You’ll receive your first reward 24 hours after staking is activated, and then every day until you un-stake. You can check the status of your rewards at the top of your wallet.
In addition to staked ETH rewards, Ethena also generates yield through a funding spread on delta hedging derivatives positions. This allows it to offer a range of sustainable yield opportunities, providing a glimpse into a future of decentralized finance that isn’t dependent on traditional financial infrastructure.
The staking process works by minting $USDE, a synthetic stablecoin that is fully backed, transparently on-chain, and free to use across DeFi applications. It is created by depositing collateral in a fluid and efficient process, utilizing the returns from staked ETH alongside market dynamics. This unique blend makes $USDE one of the most compelling and innovative stablecoins to hit the crypto space in a long time.
Staking your ENA
Once you’ve set up your wallet and delegated your coins to a staking pool, you’re ready to start earning passive income. It’s important to keep an eye on your rewards, as you want to make sure you’re getting the best possible return for your efforts. To do so, you can use a platform like DappRadar to research staking pools and ensure that your rewards are being calculated correctly.
As a DeFi protocol, $USDE offers unique opportunities to generate significant yield. By depositing their staked ETH or USDT into the protocol, users can mint USDe tokens (sUSDe) that are pegged to the dollar. However, as with any stablecoin, there are risks associated with this process. For example, if the price of ETH suddenly drops, it could impact the value of the short derivatives positions on which USDe is hedging. This could lead to liquidations of collateral, resulting in potential losses for the community. As such, USDe is only suitable for crypto-curious individuals who are comfortable with moderate to high risk tolerances.
