Ethena in Trouble? ENA Price Falls 35% as Focus Turns to Upcoming Meme Coin Exchange Listing
The governance token for synthetic dollar protocol Ethena (ENA) has shed 33% over the last week as it begins Friday morning UTC trading at $0.9632.
While this is one of the heaviest intra-week losses for a top 100 cryptocurrency, ENA looks set for a quick recovery. In the last 24 hours it has grown in price by about 10%.
These figures reflect a more volatile token than the market leaders. Bitcoin (BTC) and Ethereum (ETH) declined by 9% and 12% respectively.
The original cryptocurrency and the only coin with a market cap above a trillion, Bitcoin, recovered 5% in the last 24 hours. Ethereum, the coin underpinning the most commercially important blockchain, recaptured about 4% overnight.
The Ethena protocol appears to be one of the most cutting-edge and fastest-growing crypto ecosystems in recent history. However, the promise of a stablecoin that is not backed by cash and cash equivalents has more than a few investors wary.
That’s because the industry has seen it all before with Terraform Labs’s UST, a token that was supposed to stay at $1 through a burn/mint mechanism that involved burning $1 worth of an unbacked token called LUNA to mint $1 worth of the so-called algorithmically backed UST and vice versa.
Like USDe, UST also promised attractive yields for anyone staking it in a lending protocol called Anchor. However, when yields declined, UST began to lose popularity.
The token began to wobble from the dollar in May 2022, which then made more people flock to the exits in a self-fulfilling cycle that ended up exponentially destabilizing UST’s pegging mechanism while sending LUNA into a hyper-inflationary spiral that only concluded once a staggering 7 trillion LUNA tokens were minted.
The knock-on effects from the collapse were
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