Following the launch of Mainnet, Etena USD added to the threat that it promised a 27% yield.

Update Feb 20, 1:05pm UTC: Added quotes from Kima CEO.

Cryptocurrency investors have taken to X to express their concerns about the high yield of Etena Labs' newly launched stablecoin.

Athena Labs launched the USD stablecoin on the public network on February 19, according to an X post from the company's official page. The USDe Ethereum-based synthetic dollar currently offers a 27.6% annual percentage yield (APY), according to the Etena Labs homepage. This is significantly higher than the 20% yield provided by Terra UST on the Anchor protocol before the algorithmic stable coin issuer Terra collapses in May 2022.

The attractive product prospect created widespread concern in the crypto community. According to 0xngmi, a contributor to Defilama Code whose name is Ysmudo, the real concern is not Athena's high stablecoin production, but potential product inversion. wrote:

“When a product flips, you start losing money, and the biggest statcoin is the one that loses the most money… Previous projects have tried [close the short positions when yield turned negative]But the opening/closing space has a price, and that eats up all the production.

In his subsequent response to the debate, 0xngmi stated that Etena is “absolutely different” from the Anchor protocol, which he described as a Ponzi scheme.

According to Ethan Katz, founder and CEO of the decentralized exchange protocol Kima, maintaining such a high yield will be difficult in a bear market, which may force Etena to reduce production in the future. He told Cointelegraph: “[USDe’s] Sustainability largely depends on continued market growth and the ability to manage risks effectively – and if done right, these can provide stability, although this is highly unlikely in the crypto industry.

Etena has locked in a total value of $297.9 million and has registered more than 4,460 users, according to its homepage. The market value of the USDe rose 20.6 percent to $291.93 million in the last 24 hours, according to Defillama data.

Cointelegraph has reached out to Etena Labs for comment.

In a post on February 20, X, an angel investor and founder of DailyGuy, said that investors' concern about Ethena's product is a healthy sign for the crypto industry. wrote:

This is very different from the last cycle where there were few people asking for anything and they were told to “deal” with not making money on ponzis like Terra/Anker/UST. I'm so glad to see so many people asking Etena's question. Asking how to deliver things like 20%+ yield and also exploring what all the underlying risks are.

Athena Labs announced a $14 million funding round on February 16, backed by venture capital firm Dragonfly and other investors. The company has raised $6 million in 2023 from Binance Labs, Gemini, Bybit, Mirana Ventures, OKX Ventures and Deribit to build decentralized financial solutions on Ethereum.

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This is a developing story, and more information will be added as it becomes available.