‘Tokenized Hedge Fund’ Rakes in Crypto Billions With 37% Yield

A crypto token that aims to replicate a common hedge-fund trade is attracting billions of dollars worth of investment and widespread buzz in the market. Yet the project, known as Ethena, is also stoking skepticism about the sustainability of its yields that are currently about 37%.

Ethena and its USDe token, a so-called synthetic dollar, achieves its goal through crypto’s version of the basis trade, which exploits differences in prices between spot and futures markets. The strategy, known in crypto as a cash-and-carry trade, has proven particularly profitable recently as token prices march higher and higher and funding rates — the interest paid by bullish traders to maintain a futures position — surge.