PANews reported on April 24 that Guy Young, the founder of Ethena, posted on the X platform that many people misunderstood the relationship between Ethena and Tether - the two are not competitors, but their respective growth will directly promote each other. In this market where about 70% of perpetual contracts are denominated in USDT, every additional short position of Ethena will create new demand for USDT, because the counterparty must use USDT as collateral to establish a long position. This mechanism means that every additional $1 of USDDe supported by perpetual contracts will drive an increase in demand for USDT of about $0.7.
Young pointed out that Tether does not need to launch its own yield product because traders are already using USDT as collateral and paying 10%-30% annualized interest rates to go long on perpetual contracts. Ethena is the channel to transform this demand. The behavior of users in the crypto market is extreme, either pursuing extreme liquidity or pursuing the highest returns. When interest rates fall, the middle ground of "poor liquidity but advertised risk-free returns" will be eliminated. The trading field needs to have more liquidity and distribution advantages than Tether, and the savings field needs to provide higher returns than Ethena. The middle route is difficult to succeed. He believes that the "barbell strategy" formed by Tether and Ethena is the ultimate form of industry development.
