Fantom Founder Terra Warns: Is a Financial Crisis Looming?

Fantom Founder Terra Warns: Is a Financial Crisis Looming?

Fantom Founder Terra, also known as Andre Cronje, recently expressed his worries about the potential risk that Ethena Labs’ USDe could pose to the financial stability of the decentralizedWith normal currency, banks and governments control everything – they’re the central authority. But cryptocurrencies work differently! Instead of one central group calling all the... finance (DeFi) sector. Although Cronje did not directly mention the protocol or the synthetic dollar, his concerns revolve around the risk management tactics of Ethena Labs. His fears are primarily rooted in the negative funding rates seen in perpetual futures contracts, which he highlighted in a post on April 3. The issue came under scrutiny when Ethena’s USDe stablecoin yield first raised eyebrows on February 19, after its introduction on the public mainnet with an impressive 27.6% annual percentage yield (APY). This yield was significantly higher than the 20% yield on the failed TerraUSD (UST) on the Anchor protocol, which collapsed in May 2022, causing the loss of tens of billions of dollars in a matter of days. This unfortunate event served as a stark reminder of the potential risks and fallout of such high yield rates. This summary emphasizes the perspective of Fantom Founder Terra on the potential repercussions of improper risk management in the DeFi space and the potential for a financial catastrophe similar to the TerraUSD incident.

Not financial advice. Always be safe and secure when dealing with cryptocurrency. Never send anyone your private key. Always Do Your Own Research..DYOR..DYOR..DYOR!