Ethena founder Guy Young posted on X platform that many people misunderstand the relationship between Ethena and Tether - they are not competitors, but their respective growth will directly promote each other. In a market where approximately 70% of perpetual contracts are denominated in USDT, every time Ethena increases a short position, it creates new demand for USDT, as counterparties must use USDT as collateral to establish long positions. This mechanism means that every time USDe supported by perpetual contracts issues $1, it will drive an increase in USDT demand of approximately $0.7.
Young pointed out that Tether does not need to launch its own yield products, as traders are already using USDT as collateral and paying an annualized interest rate of 10% -30% to long perpetual contracts. Ethena is the channel for converting this requirement. The user behavior in the cryptocurrency market is extreme, either pursuing extreme liquidity or the highest returns. When interest rates fall, the middle ground of "poor liquidity but touted risk-free returns" will be eliminated. The trading sector needs to have more liquidity and distribution advantages than Tether, while the savings sector needs to provide higher returns than Ethena. The middle ground is difficult to succeed. He believes that Tether and Ethena formed a&34; Barbell Strategy&34; This is the ultimate form of industry development.
