TL;DR

Ethena recently announced the launch of the Season 2 activity Sats, which is expected to last until September 2nd or until the TVL of USDe grows to $5 billion. If you missed the first season, it’s not too late to join the second season now. This article will analyze in detail three different Ethena strategies and their potential returns.

Before delving into the analysis, let’s first understand some basic knowledge about the transaction.

1. Ethena is a protocol that issues USDe, a yield-bearing synthetic dollar/stablecoin. When you purchase USDe, you can accumulate points (Sats). These points will count towards your eventual reward in ENA (Ethena’s governance token).
2. Pendle is a dapp for yield trading that splits yield tokens into principal tokens (PT) or yield tokens (YT). PT allows users to have an independent principal exposure, while YT allows holding an independent yield exposure. Since YT does not include the principal, the value of YT tokens will tend to zero on the YT token maturity date. For the strategies discussed in this article, the focus is mainly on YT.
3. For example, the annualized yield rate of 1 USDe is 17%. When you purchase USDe YT tokens on Pendle, the YT tokens only contain your 17% yield rate + the points accumulated on the underlying protocol (in this case, Ethena).

In addition to the Ethereum mainnet, Pendle is also deployed on Layer2 blockchains Mantle and Arbitrum.

In summary, the following introduces three popular airdrop mining strategies for Season 2:

1. Low risk: Hold USDe on Ethereum (5x sats/day) or lock it for at least 7 days (20x sats/day)
2. Medium risk: Purchase USDe YT (yield tokens) on Pendle
3. High risk: Lock ENA, the governance token of Ethena, + Purchase USDe YT on Pendle at a 1:1 ratio

Estimating the potential return on investment requires answering a key question: how many Sats will be released by the end of Season 2? Based on the answer to this important question, airdrop allocations can be quantified, and which strategy can provide the best return can be determined.

Note that USDe or ENA points on the CEX wallet are not considered

Here, the growth rate of Sats is conservatively estimated to be 40%, and by the end of the second quarter (September 2, 2024), a total of 10.1 trillion Sats will be released. If the total TVL reaches 5 billion US dollars, Season 2 will also end. But with the current TVL level of $2.4 billion, this is unlikely to be achieved sooner.

The first strategy: Hold and lock USDe

Now calculate the return on investment of just holding USDe, which is the lowest risk strategy. The following are 2 assumptions:

1. 5% airdrop allocation (assumed to be the same as Season 1)
2. Estimated total airdrop value at $20 billion FDV (currently $14.4 billion)

As shown in the table below, if you locked $20,000 today at a 20x multiple (with 130 days left in the second quarter), you would earn $5,186, an ROI of 25.93% or an APY of 72.45%.

Unlike subsequent strategies, you can keep your entire principal as this strategy does not involve Pendle.

Second Strategy: Pendle YT Strategy

Now looking at the medium risk strategy to earn sats using Pendle’s USDe YT on the Ethereum mainnet.

For the same $20,000 capital (but with a different term of 92 days), you will get a net return of about $23,700, which is about 4 times the first strategy, with an ROI of 118.55% and an APY of 331.22%. It is worth noting that the YT value tends to zero at maturity, so the principal of US$20,000 will be deducted.

Please note that the expected returns in the calculations below are based on Pendle’s current leverage. YT leverage is affected by YT market demand and the respective expiry dates of Pendle pools.

Ethereum Pendle Pool

If the same strategy is deployed on the Arbitrum Pendle pool, the ROI and APY are slightly lower. This difference is also due to the different YT leverage levels of these fund pools.

Arbitrum Pendle Pool

You can also deploy the same strategy on Mantle or Zircuit Pendle pools.

Third Strategy: Buy ENA YT + USDe YT

Finally, the riskiest strategy splits funds evenly between locking ENA and buying Pendle’s USDe YT.

Why all this complexity? Users who lock ENA in each wallet accounting for at least 50% of their total USDe holdings will receive 50% of the reward. By keeping YT-ENA and YT-USDe in the same wallet, the total YT-USDe rewards in both pools will be increased by 50%.

This may also be the strategy of the smartest YT traders, who make full use of the airdrop rewards they received in Season 1 to obtain higher sats accumulation efficiency in Season 2.

As you can see, this strategy yielded the highest returns on Pendle (Arbitrum). The ROI is 162.56% and the APY is 454.17%. This higher reward is commensurate with the higher risk traders take on by having to lock ENA.

Arbitrum USDe Pool and Ethereum ENA Pool

Disclaimer：

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