Fantom (FTM) Founder Andre Cronje Claims That This Altcoin May Experience a Major Collapse Like UST

cryptocurrency Andre Cronje, one of the leading names in the world, Ethena (ENA) USDe published a striking article questioning the potential risks associated with the token and comparing the trajectory of Ethena to that of the collapsed cryptocurrency UST.

Fantom (FTM) founder Cronje, known for his insightful analysis and contributions to decentralized finance (DeFi), expressed concerns regarding Ethena’s underlying mechanisms and integration into various protocols. It highlighted the complexities surrounding perpetual contracts, margin collateral, and the general risk exposure inherent in the system.

Perpetual contracts, a key component of Ethena, allow investors to speculate on asset prices without owning the underlying assets. However, Cronje noted the significant risk posed by funding rates, which can fluctuate and potentially lead to margin calls and liquidations, ultimately resulting in an unbacked asset.

Additionally, Cronje stated that Ethena relies on yield-based collateral such as stETH, which may not adequately mitigate risks in the event of market downturns or funding rate changes. He questioned the sustainability of strategies aimed at preserving neutrality by making use of guarantees and permanent contracts.

The article was written at a critical time when Ethena was starting to gain traction and be integrated into various DeFi protocols.

*This is not investment advice.

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