Historical Examples

Ethena captures the only two large scale sustainable sources of yield in crypto

It is important for us to consider how sustainable the generated protocol yield really is. To do this, we can review the historic implied yield that the protocol would have earned in various market conditions on an annualized basis. While the yields across DeFi are often self-referential and endogenous to the system, the protocol yield is unique in that both components are exogenous to the protocol.

A key thing to note, while the staked Ethereum yield is variable and out of the control of Ethena, the protocol is constantly optimizing the funding rate earned on perpetual contracts. While funding is floating by nature, the use of dated deliverable futures the protocol to fix the second yield component.

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