The Pulse: Unlike Luna, at least Ethena is willing to discuss its risks

When I attended a weekly meeting I organized in London, I heard for the first time people who were passionate about Luna and UST. The currency kept rising, they said, and the UST was being used by citizens in South Korea to pay for groceries, they claimed.

At the time, I was skeptical, to say the least. A stablecoin backed by another token that could go to zero at any time seemed precarious at best. One of my biggest journalistic regrets was not delving deeper into it and writing up a detailed consideration of its risks. But even if I had, every article would have been nonsense by the self-proclaimed Lunatics, the cult surrounding Do Kwon.

“Anon, you could be listening to CT influensoors about UST depegging for the 69th time. Or you can remember that they are all poor now, and take up running instead,” Kwon posted on X prior to the stablecoin collapse – as one of many arrogant posts about the status of the project he would make regret it later.

Since the collapse of Luna and UST, taking with them up to $40 billion in value, many people have been skeptical of projects that even vaguely resemble such a stablecoin. It is therefore not surprising that some kind of stablecoin project then called Ethena ENA

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started to gain momentum, the comparison was made.

Ethena is a complicated beast. At first glance, it seems like a stablecoin with high returns, like UST offered. But in reality it’s more of a combination of a structured product and a stablecoin, possibly split depending on whether the token is being staked, as noted by The block study.

When I spoke to Ethena founder Guy Young, who goes by the pseudonym Leptokurtic, in February, he said his worst-case scenario for the project was counterparty risk. This is the possibility that funds stored with institutional managers such as Fireblocks and Copper could be lost for one reason or another. “I think the worst that could happen is if one of those institutional custodians has a major problem and actually fundamentally loses the assets,” he said at the time, signaling a willingness to discuss what could go wrong.

In addition, Ethena is much more transparent and open about the potential risks. On his, for example Frequently asked questions pageIt outlines seven risks facing the project, from funding rates to exchange rate failures and even regulatory issues (which, given that the project is delivering returns thanks to the efforts of a few third parties, seems worth recognizing). She discusses in detail each topic how she monitors certain risks.

So while the issue of Ethena’s risk profile is very complex and subject to much discussion on faced with criticism for pointing out possible defects. And this, you might say, is progress.

Now on to a selection of stories that caught my attention this week.

No, the DOJ did not move 30,000 bitcoin to Coinbase

A few major crypto news sites reported that the DOJ sent 30,000 BTC to Coinbase last week. Only that number wasn’t quite right.

Like The Block covered in real time, the DOJ wallet sent a test transaction of 0.0001 BTC to a wallet labeled as belonging to Coinbase Prime on Arkham. The rest of the money was sent to an exchange address, meaning that in all likelihood they effectively stayed put. Soon after, 2,000 BTC was sent to the same Coinbase wallet, with the remaining funds sent to a change address.

While the Bitcoin blockchain is a bit complicated to follow, this broadly means that 2,000 BTC went to Coinbase, and the rest most likely stayed in the same wallet (although a different public key was used).

It’s a bit confusing, but it seems important to note because this marks the difference between the government selling $132 million worth of bitcoin – and $2 billion.

Wormholehacker was initially eligible for his airdrop

Cross-chain protocol Wormhole initially awarded tokens to the entity behind the $323 million hack in 2022.

About four addresses involved in the hack were allocated more than 31,600 W tokens, worth about $38,000.

Although the tokens were initially allocated to these addresses, they have now been removed from allocation, according to a source familiar with the situation.

Major backers support Alliance’s third fund

Brevan Howard Digital, the crypto arm of the global asset management giant, and Galaxy Digital, the crypto firm founded by billionaire Mike Novogratz, have both invested in crypto accelerator Alliance’s third fund, writes Yogita Khatri in her latest scoop.

The Alliance Fund III first closed in February with commitments from Brevan Howard Digital and Galaxy Digital worth $20 million. Each company has already invested $10 million in the fund.

Fund III aims to raise an additional $80 million by July, with a maximum of $100 million. It is expected to invest $500,000 per startup.