Terminal Finance, the new decentralized exchange (DEX) incubated by Ethena Labs, has marked an impressive milestone. The protocol has accumulated $280 million in Terminal Finance pre-launch deposits. These funds come from over 10,000 different wallets. The information was confirmed via public data on blockchain explorers ahead of its official December launch.
The massive interest is focused on the three available vaults. Users have deposited funds in USDe, Ethereum (ETH), and Bitcoin (BTC). This massive capital intake anticipates the Token Generation Event (TGE) scheduled for December. The goal is to attract liquidity providers and institutional investors. They seek to generate yield on crypto assets without leaving the on-chain ecosystem. Ethena’s strategy is clear.
This $280 million accumulation is fundamental to Ethena’s plans. Terminal Finance is designed to be the main liquidity point for sUSDe. sUSDe is the interest-bearing version of the USDe synthetic dollar. The DEX will also support assets favored by funds and firms. USDe maintains its 1:1 peg through delta-neutral hedging. This strategy combines ETH (or stETH) with short positions in perpetual futures.
What risks does this high concentration of capital imply?
The yield offered to sUSDe holders comes from this strategy. The interest rates have shown high volatility. In 2024, they reached peaks of 55% in some months. However, the annual average sits at an attractive 19%. This initial liquidity is vital for sUSDe to maintain stable prices and depth. Nonetheless, it also raises alerts about technical dependencies. A high concentration of capital before the launch exposes the protocol. It depends on the code being flawless and the operational hedge not breaking.
The success of this initial phase boosts the use of sUSDe in the sector. The accumulated liquidity is expected to facilitate the synthetic dollar’s use as collateral. It can also be lent out on various Defi protocols. Furthermore, the high volume and institutional profile of the project will surely attract regulatory attention. These supervisors will likely demand greater clarity on the reserve and risk mechanisms.
Terminal Finance aligns with Ethena’s broader strategy. This includes integrations like JupUSD on Solana and the future ‘Converge’ project with Securitize slated for 2025. The next crucial step will be the TGE in December. At that point, it will be seen if the deposited liquidity transforms into daily trading volume. Success will depend on whether sUSDe solidifies itself as a primary tool for generating yield sustainably.
