The increase in USDe supply has been something to behold. But now with sUSDe back to ~50 bps above holding a 4-week tbill, it’s clear they have trouble deploying it. A quarter of backing assets are in USDC or USDtb. Growth is constrained by perps market capacity

While I would expect the overall perps market to continue growing long run, this is a good reminder that Ethena’s inputs are finite, and when the supply of perps positions appropriate for their trade diminishes, then they are stuck parking cash in ultra-safe, low yield options

The thing to remember is that Ethena’s growth is predicated on favorable, deep perpetuals positions. No matter how perfectly they execute, they can’t grow to the sky without that vital input doing the same. Like when auto manufacturers couldn’t build cars due to lack of chips

So bulls expecting another leg up in supply need to reconcile why that would happen with ever-lower yields, why perps size will grow to provide more inputs, or why demand for unstaked USDe would grow