The Ethena Points Activity is about to end: The best strategies under different yields and Liquidity demands

Currently, the market implies an annualized yield of up to 170% for Ethena's USDe token. This astonishing figure suggests that the points activity may soon come to an end. This article will provide a detailed introduction on how to optimally participate in the final stage of this project.

Ethena's core business model is to use stablecoins provided by users to purchase LSD (such as stETH) on exchanges while shorting ETH to achieve hedging. This strategy not only generates ETH staking yields but also profits from the funding rates of the short position. During bull markets, as the funding rates are relatively high, Ethena's profits also increase correspondingly.

Ethena mainly offers two types of token products:

1. sUSDe: This is a token that can earn native interest. Its exchange rate with USDe will gradually increase over time, reflecting the accumulated interest. It is important to note that converting sUSDe to USDe requires a 7-day unlocking period.

2. USDe: This is an interest-free token primarily used to build Liquidity pools in the DeFi ecosystem. The earnings from the assets backing USDe will be used to increase the return rate of sUSDe. It is worth noting that regular users can only swap USDe with USDC/USDT through DEX, so there will be a small price spread loss when entering and exiting.

Next, we will recommend several optimal participation plans based on different yield expectations and liquidity needs:

1. Zircuit+USDe: This is currently the highest-yielding option with no lock-up period and still has available quota. Users only need to deposit USDe into a certain L2 platform to earn 7 times points and the native points of that platform. This method supports instant unlocking, making it very flexible.

2. Locking USDe: This method offers the largest participation limit, balancing returns and Liquidity. Directly locking USDe can earn 10 times points, but requires a 7-day unlocking period. Currently, there is still a significant remaining quota for this method.

3. Locking Curve USDe LP: This method offers higher returns but has poorer Liquidity and limited quota. Locking specific LP tokens can yield 15 times the points, but requires a 21-day unlock period during which no earnings are generated. Considering that the points activity is about to end, the opportunity cost of this method is relatively high. Currently, the quota is almost full, and it is recommended to keep a close eye on it and participate when there is available quota.

4. Holding sUSDe: This method offers up to 67% USD-pegged returns, but the points yield is relatively low, only 1x. Unlocking requires 7 days, and liquidity is average. Users can also sell at a discount through DEX.

5. Pendle/Gearbox USDe: These methods theoretically can achieve very high returns. For example, using YT on Pendle can yield 200 times the points, and through circular lending on Gearbox, one can obtain up to 90 times the points. However, these schemes are already filled to capacity and carry high risks, so participation is only recommended for experienced professionals.

Overall, users should choose the option that best suits their liquidity needs and risk tolerance from the above-mentioned options. Other unmentioned options either offer lower returns than the above options or have poorer liquidity, so they will not be elaborated on.