The Block Editor: Unlike Luna, at least Ethena is willing to discuss its risks

Tim Copeland, the editor-in-chief of The Block, wrote that Ethena is a complex entity. On the surface, it appears to be a high-yield stablecoin similar to what UST offers. However, in reality, it's more like a combination of structured products and stablecoins with potential differences reflected in whether or not the token is pledged. In February during a conversation with Ethena's founder Guy Young (alias Leptokurtic), he stated that the worst-case scenario for this project would be counterparty risk - referring to the risk of losing funds stored at institutional custodians such as Fireblocks and Copper for some reason. He said then: "I think the worst thing would be if one of these institutional custodians had major issues and actually lost assets completely." He expressed his willingness to discuss possible problems. Beyond this, Ethena has much greater transparency and openness about its potential risks. For example, on its FAQ page, it lists seven major risks faced by the project ranging from fund rates to exchange failures and even regulatory issues (given that this project earns returns through efforts by few third parties which seems worth acknowledging). It discusses each issue in detail and explains how certain risks are monitored.

Copeland concluded: "Therefore despite Ethena’s very complicated risk situation causing many controversies on X platform , I am impressed that at least this time around risks were discussed openly and transparently — no critique was criticized for pointing out potential flaws . You could say that’s progress.” Recalling Luna & UST events Copeland wrote “One of my biggest journalistic regrets is not delving deeper into Luna & UST considering their risks more thoroughly . But even if I did any article would have been scorned by self-proclaimed madmen cult formed around Do Kwon.”