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Ethena Labs and Its ENA Token Make Waves Amid a Market-Wide Correction

Mega generous airdrop, crazy price rally, and controversial on-chain investigation: Ethena Labs enters the scene with a bang 

While the crypto media can't stop buzzing about Bitcoin and Ethereum ETFs, and the crypto market cools down after the bullish thunderstorm, interesting things have been going on in the realm of altcoins. The newly emerged DeFi project Ethena Labs, presumably based in the British Virgin Islands, has been hyperactive recently.
 
It conducted a huge airdrop where one lucky devil received a life-changing sum in ENA tokens, had said token listed on major exchanges where it debuted in a 'pumpy' style, and became embroiled in a controversy involving a renowned on-chain investigator and the project's flagship product, a synthetic US dollar protocol (USDe). Before we bite into these juicy crypto topics, let's take a quick moment to understand Ethena Labs, its concept, and its flagship product. 

What is Ethena Labs, ENA, and USDe? 

Ethena Labs is a relatively new player in the DeFi (decentralized finance) space, founded in 2023. Their main focus is creating a crypto-native alternative to traditional stablecoins, like Tether (USDT) or USD Coin (USDC). Here's a breakdown of what they're building:

  • Synthetic Dollar Protocol (USDe): This is their main product, a stablecoin built on the Ethereum blockchain. Unlike traditional stablecoins that are backed by real-world assets (like USD), USDe uses an algorithm and staked Ethereum to maintain its peg to the US dollar.
  • Focus on Decentralization: Ethena Labs aims to create a stablecoin system that's completely independent of traditional banking infrastructure, promoting a more decentralized financial system.

Ethena Labs made itself known on the DeFi (decentralized finance) scene with the launch of its USDe synthetic dollar on the public mainnet on February 19th. A few weeks later, on March 8th, USDe emerged as the top earner among decentralized applications (DApps) by offering investors a (suspiciously) staggering 67% annual percentage yield (APY).

Ethena's USDe currently offers a 35.4% APY for its over 123,000 users, while the platform's total value locked (TVL) stands at $1.6 billion.

ENA as a proof that you must participate in (trusted) crypto airdrops  

Ethena Labs' highly anticipated airdrop on April 2nd resulted in a windfall for one lucky wallet. According to on-chain data analyzed by Arkham Intelligence, wallet address 0xb56 raked in a hefty 3.3 million ENA tokens, valued at roughly $1.96 million at the time. This represents the largest single haul from the airdrop, which distributed a total of $450 million worth of ENA tokens to eligible participants.

The airdrop distribution was completed swiftly, with all tokens claimed by 7:17 am UTC on April 2nd, as confirmed by Ethena Labs. This event also coincided with the listing of ENA tokens for farming on the Binance Launchpool last week, offering users additional ways to earn the new cryptocurrency.

However, a critical security concern emerged just days before the airdrop. On March 29th, a fake, copycat ENA token was exploited, resulting in a loss of $290,000 worth of BNB. On-chain security firm PeckShield mistakenly identified the fake token as legitimate, highlighting the importance of user vigilance in the cryptocurrency space. Thankfully, the real Ethena token remained secure throughout this incident.

ENA on a bullish tear while the rest of the market bleeds profusely 

In conjunction with the splashy airdrop, the ENA token got listed on the largest CEXs, namely Binance, Bybit, KuCoin, HTX, MEXC, and BitMart. As often happens on Binance, where, as mentioned, users had been given the opportunity to farm ENA prior to the launch, the newbie's price began pumping up like a gym rat after three scoops of pre-workout. Ironically, the rest of the cryptocurrency market has been beaten to a bloody pulp by the sellers.

Binance app screenshot.

This screenshot from Binance speaks louder than a thousand words: ENA making triple-digit gains while all top coins are shedding value. What can you say, it's good to be an ENA holder these days. 

ENA/USDT from Tradingview. Now, let's examine an hourly price chart of ENA/USDT, obviously choosing a small time frame for a newly listed crypto. In just twelve hours after the rollout, the token gained 207%. However, if asked whether it's okay to buy ENA now, I would advise waiting until ENA follows the rest of the market and cools down; in other words, until it loses nearly half of its current value of $0.82. 

Is ENA a good investment? The crypto community still shrugs when recalling the LUNA and UST disaster, indicating that the concept of synthetic stablecoins is now perceived with increased caution. Again, it's a new and ambitious project that requires more study and observation before it can be labeled a 'good crypto investment.'

TardFiWhale goes after Ethena Labs with both barrels blazing 

Highly regarded on-chain analyst TardFiWhale has sparked controversy within the cryptocurrency community by highlighting potential structural weaknesses in USDe

TardFiWhale's insights hold significant weight due to his accurate prediction of the Terra ecosystem's collapse, including its UST stablecoin, several months in advance.

In mid-March, the researcher publicly offered to disclose a vulnerability in USDe in exchange for a $500,000 bounty. This figure was later raised to $1 million. TardFiWhale's stated intention is to prevent a similar financial catastrophe to the one that unfolded with Terra.