🏁Competitive Analysis
Umoja Yield Synths have the best risk mitigation of any synthetic dollar.
The following provides a competitive analysis of Umoja's Yield Synths and Ethena's USDe synthetic dollar:
Ethena (USDe) | Umoja Yield Synth | |
---|---|---|
Yield | Ethena relies on stETH yield and ETH perpetual funding rates, and is unable to sit out the market during periods of negative ETH funding rates. | We expect the Umoja Yield Synth will have a higher yield because: 1. Diversification: We can direct capital towards those tokens with the most favorable funding rates 2. Flexibility: Unlike Ethena, we are not forced to stay in a short perpetual position as a result of our protocol design. |
Principal Protection | A period of sustained negative funding rates, could theoretically see the Ethena insurance fund depleted in a relatively short time. | The Umoja Yield Synth can sit out the market in times of negative funding rates, preserving dollar principal protection. |
Arbitragability | Ethena offers a large and inflexible target for sophisticated investors and hedge funds to aim to arbitrage against, particularly in ETH perpetual markets. | The Umoja Yield Synth can flexibly generate funding yield from a variety of different tokens, making it much harder for sophisticated traders to arbitrage against our trading flows. |
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