💵Ethena's USDe Stablecoin Roils Web3 Users With Purported Yield

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Crypto Twitter is ablaze with commentators responding to the launch of Ethena Labs’ yield-bearing stablecoin, USDe. Ethena claims USDe holders can earn 27% simply by holding the token, which is backed by liquid staking tokens and funding rates for ETH short positions.

In other news, Vitalik Buterin is warning against excessive complexity on Layer 2, activity on Avalanche is bouncing back following growth in native GameFi and memecoins, Gauntlet is cutting ties with Aave, and Paris Saint Germaine is the first sporting club to onboard as a Chiliz Chain validator.

Plus, Starknet’s enormous airdrop comprised the largest token drop in the history of crypto at more than $2B.

✍️ In today’s newsletter:

USDe’s purported yield attracts controversy
Vitalik on complexity trade-off between L1 and L2
Avalanche on-chain activity bounces back
Gaunlet ends Aave partnership
PSG validates Chiliz Chain
STRK airdrop tops rankings at $2B

📈 Markets in the last 24 hrs:

Ticker	Value	24h
Bitcoin	$51,516	-1.47 %
Ethereum	$2,935	-2.66 %
Gold 1st Future	$2,022	-0.26 %
S&P 500	$4,982 0.13	%
Web	3 Token2.29	-2.32 %
Learn more about Arch Indices		%

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DEFI

Ethena Stablecoin’s 27% Yield is Triggering Terra-Induced PTSD

TLDR The mainnet launch of Ethena Labs’ yield-bearing stablecoin, USDe, has ignited fierce discussions on crypto Twitter. With Ethena estimating holders can earn annual yields of 27%, many onlookers are skeptical of the project’s claims.

SO WHAT For many, USDe’s purported yields are shades of Terra’s UST, which claimed to offer annual returns of roughly 20% owing to its algorithmic design. By contrast, Ethena said USDe’s yields are derived from Ethereum staking rewards and funding rates for short positions.

TECHNOLOGY

Vitalik Remains Wary Of Overly Complex Layer 2s

TLDR Vitalik Buterin, the co-founder of chief scientist of Ethereum, has penned a blog post discussing the trade-offs in compleity between Ethereum’s Layer 1 and Layer 2 architecture. Buterin said his views have evolved over time, warning against excessive complexity at L2.

SO WHAT Buterin’s post comes as Ethereum is beginning to realize its rollup-centric scaling roadmap, with the total value locked in L2s growing to new all-time highs above $28B. Ethereum is also gearing up for its highly-anticipated Dencun upgrade, which is set to significantly reduce Layer 2 transaction fees in just a few weeks’ time.

Avalanche Stages Comeback Amid Growth In Memecoins, GameFi, and RWAs

TLDR Avalanche’s on-chain activity has staged a comeback in recent months, with growth in native GameFi, real-world assets, and memecoins driving up the network’s adoption. A new report from Flipside Crypto notes that Avalanche’s has doubled since October, while subnet activity is up 36% over the same period

SO WHAT While Avalanche was among the best-performing Layer 1 networks of 2021, with TVL peaking at 11.5B. However, Avalanche’s TVL has since dropped 92%, making the recent resurgence in activity on the network a welcome sign for Avalanche supporters.

BUSINESS

Gauntlet Quits As Aave Risk Steward Citing Clashes With Community

TLDR The long-running partnership between Aave, the leading DeFi money market, and Gauntlet a web3 risk management firm, is coming to an end after four years. John Morrow, the co-founder of Gauntlet, attributed the decision to disagreements between the firm and Aave’s largest stakeholders over the sale of Aave’s technology to third-party protocols.

SO WHAT Marc Zeller, the founder of the Aave Chain initiative, said Gauntlet struggled to provide services within a satisfactory timeframe. Zeller said Aave is now looking forward to fielding proposals from other risk management firms.

Chiliz Onboards PSG Football Club As Network Validator

TLDR Paris Saint Germaine, the top French football club, has started operating as a validator for Chiliz Chain. The club pledged to reinvest all of the revenue generated from validating into buying up its $PSG Fan Token.

SO WHAT Chiliz claims to host a bustling SportFi ecosystem worth $1B, primarily comprising Fan Tokens issued in partnership with leading sporting organizations. The project initially launched on Ethereum in 2018, but transitioned to operating its own chain from late 2022.

AIRDROPS

Starknet’s $2 Billion Airdrop Is Crypto’s Biggest Yet

TLDR The highly anticipated airdrop from Starknet arrived as the largest on record, with the project allocating $2B worth of STRK to early adopters as the token debuted at an enormous fully diluted valuation of $30B. Arbitrum’s $1.5B drop previously held the record for the most valuable airdrop on record.

SO WHAT Airdrops have emerged as a popular mechanism for issuing new tokens, with many networks and protocols seeking to reward early adopters with sizable token distributions, shoring up market liquidity for their native assets in the process.

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