On May 4th, Ethena updated its points bonus measures, motivating the price (Implied APY) of Pendle YT-ENA to skyrocket from 64% to 82%, showing the market’s enthusiastic response to these measures. This article will analyze in-depth the four investment strategies of Ethena’s second quarter and estimate the potential returns of each strategy to assist investors in making more informed decisions.
Table of Contents:
1. Holding and Locking USDe
2. Investing in Pendle YT-USDe
3. Investing in YT-ENA
4. Investing in YT-ENA + YT-USDe
The recent fastest-growing stablecoin project, Ethena, updated its points (sats) bonus measures on May 4th, which incentivized the price (Implied APY) of YT-ENA on Pendle to surge from 64% to 82%, with a temporary report of 80% at the time of submission. This demonstrates the market’s strong interest in these bonus measures.
The latest points bonus measures are as follows:
In the following sections, we will refer to the comprehensive guide of Ethena’s second quarter by former Bankless analysts Donovan Choy and Thor to analyze the four different investment strategies of Ethena and their potential returns. This analysis aims to provide interested readers with thorough research preparation and does not constitute investment advice.
When estimating the potential returns of each strategy, it is necessary to first estimate the total number of sats that will be distributed after the end of the second quarter on September 2nd. This estimation allows us to calculate our airdrop allocation and determine which strategy can provide the best returns. According to the Ethena website, 1.76 trillion sats have already been distributed. Without considering the sats issued on CEX wallets for USDe or ENA, according to Choy and Thor’s calculations, the estimated scale of sats at the end of the second quarter will reach approximately 10 trillion.
In addition, we assume that the FDV (Fully Diluted Valuation) of ENA will reach $20 billion (currently around $13.8 billion), and the airdrop allocation for the second quarter will be the same as the first quarter, both at 5%. This means that the value of the airdrop will reach $1 billion.
Estimation of the scale of points at the end of the second quarter:
If one only holds and locks USDe, they will earn 20 sats per day for every 1 USDe locked, resulting in an airdrop allocation of 0.00051%. This translates to an income of $5,117, which represents a 25.59% return on investment (or a 72.45% annualized yield). The table below does not consider the additional 20% points bonus from using OKX, Binance, Bybit, and Bitget Web3 wallets. Therefore, if one wants to adopt this strategy, it is recommended to use the mentioned CEX wallets to lock USDe for higher returns.
Investing in Pendle YT-USDe:
Continuing from the previous article, which used the Renzo protocol as an example to explain the calculation method for investing in Pendle YT, the same concept applies to investing in other YT products. Pendle has USDe markets on Ethereum (expires on 7/29), Arbitrum (expires on 8/29), and Mantle (expires on 7/29), where each 1 USDe can earn 20 sats per day. The table below compares the returns on investment for investing in YT-USDe on these three chains. It can be observed that the APY on each chain significantly surpasses the 78.7% of the first strategy. Particularly, the return on investment on the Ethereum mainnet is the highest, with a profit of $50,469 from a $20,000 cost, resulting in a 468.56% return.
It is worth noting that Mantle has an additional 0.019 EigenLayer points per 1 USDe due to the Mantle Rewards Station program, which is not considered in the table below and provides extra income.
USDe markets on each chain:
– Ethereum (expires on 7/29)
– Arbitrum (expires on 8/29)
– Mantle (expires on 7/29)
Investing in Pendle YT-ENA:
Next, investors can also invest in Pendle’s ENA market, which is only deployed on the Ethereum mainnet. Each 1 ENA can earn 30 sats per day. With the effect of YT leverage points, it is estimated that the airdrop allocation will be 0.00434%, resulting in a profit of $23,353 and an APY of 353.19%. Pendle interns have also made similar estimations today.
Although it does not reach the over 400% annualized return of investing in YT-USDe, this strategy is suitable for investors who are bullish on ENA and do not want to bear the risk of USDe being unpegged.
Investing in Pendle YT-ENA + YT-USDe:
Lastly, let’s look at the strategy with the latest points bonus measures. This strategy allocates 50% of the capital to investing in YT-ENA and 50% to investing in YT-USDe. This means that 100% points bonus can be obtained in the USDe position, earning 60 sats per day for every 1 USDe locked (it is not clear whether the ENA position can also receive the bonus, so the table below conservatively assumes it does not). As seen, this strategy on Arbitrum achieves the highest return, with a profit of $73,391 and an APY of 1,136%. This higher reward corresponds to the higher risk traders take by locking ENA.
Through detailed return calculations, this article explores the four strategies of Ethena’s second quarter, providing readers with a comprehensive guide to participating in Ethena’s second-quarter points activity and enhancing investors’ confidence and decision-making foundation for investing in YT. Additionally, Choy and Thor’s Excel spreadsheet is attached for interested readers to modify relevant assumptions similarly to this article.
It should be noted that under the new points bonus measures, the inflation of points may be more severe, which could dilute the airdrop allocation that can be obtained from the mentioned strategies. Additionally, the cost of on-chain operations and the performance of ENA prices are also crucial factors to consider.
Today, Ethereum L2 Mode also announced that the second-quarter points activity will introduce USDe and sUSDe. Readers interested in Ethena can pay attention to this, as there may be potential opportunities for dual investments.
Related articles:
– MNT surged 35% in half an hour! Listed on Upbit and making waves, Mantle introduces new staking rewards of 2.5 billion Ethena shards.
– ENA surged to $1.4, reaching a new high! Ethena introduces new incentive measures, with a whale investing $8 million, and USDe’s market cap surpassing $2.2 billion.
– Ethena integrates Binance, Bybit, OKX, and Bitget exchange Web3 wallets! Rewards and bonuses for locking USDe, ENA breaks $1.5.