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What is the best cryptocurrency to buy?
Ondo Finance (ONDO) and Ethena (ENA) have become two of the fastest growing blockchains in the industry. Their tokens have reached market capitalizations of over $1.6 billion and $1.3 billion, respectively. So, which is the better buy between ONDO and ENA?
What is Ondo Finance?
Ondo Finance is a leading player in the tokenization industry. Backed by Founders Fund, Coinbase, and Pantera, the network operates two tokenized funds that allow people to earn returns: USDY and OUSG. The US Dollar Yield (USDY) has amassed over $250 million in assets, offering users a 5.20% APY.
On the other hand, the US Treasury Token (OUSG) has accumulated assets of over $215 million and has an APY of 4.96%. Ondo generates returns by investing in funds managed by Blackrock and PIMCO. It also uses regulated service providers like StoneX and Ankura to ensure users receive daily accounting.
Although USDY and OUSD are not classified as stablecoins, holders believe they are better than Bind USDT and USD coin. This is because, while USDT and USDC owners invest in government and commercial bonds, holders do not receive a share of the profit. If you hold $10,000 in USDT in ten years, you will receive the same amount back.
What is Ethena?
Ethena is a blockchain project that has been compared to Terra, which collapsed in 2022. This is because Ethena provides USDe, a new stablecoin that has surpassed $2.8 billion in assets and almost 200k users. It is supported by DragonFly, Arthur Ayes and Binance.
USDe stablecoin holders are making a fortune. While Ondo’s USDY has an APY of 5.20%, the USDe has a higher yield of 35.9%. This is a higher return than most companies return to their investors.
USDe uses a fairly complex approach to generate returns. Initially earn by focusing on Ethereum which generates a return of less than 3%. It then opens short derivatives when users mint the USDe stablecoin. When this happens, a mismatch occurs between the positive funding rate and the underlying spread earned by participants with short exposure to the delta.
Overall, Ethena uses complex derivatives and leverage that most analysts deem a bit risky, especially when something goes wrong. For example, Ethena came into the spotlight after speculation that Bybit, a major player in its ecosystem, was insolvent.
Is it better to buy between Ondo and Ethena?
Ondo Finance against Ethena
Ondo and Ethena are fairly new crypto tokens that started trading earlier this year. Going forward, their performance will depend on the overall performance of the cryptocurrency sector and the demand for their underlying assets: OUSG, USDY and USDe.
However, due to the risks associated with USDe, I believe ONDO is a safer bet. Also, how mentioned Before, the USDe stablecoin could be banned in the United States if the Lummis-Gillibrand regulatory bill passes the House and Senate. This bill would ban all algorithmic stablecoins to prevent an Earth Moon collapse-like event.