This week's market focus: USDe yields, Hyperliquid points, political memes
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This week's market focus: USDe yields, Hyperliquid points, political memes
Ethena allocates more protocol revenue to sUSDe holders, Hyperliquid extends its points season.
Navigating Web3 tides with focused insightsAuthor: OUROBOROS CAPITAL & 0XRAMEN
Translation: TechFlow
This issue includes: Ethena allocating more protocol revenue to sUSDe holders, Hyperliquid extending its points season, and the latest developments in political memes.
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Ethena Increases Protocol Revenue Allocation to sUSDe Yield
Actionable Insight: Monitor sUSDe yield and engage in yield farming when sUSDe yield rises.
On May 16, Ethena announced an increase in the portion of protocol revenue distributed to sUSDe holders from 50% to 80%. The formula for calculating sUSDe yield is as follows:
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sUSDe Yield = (Protocol Revenue × Portion Allocated to sUSDe) / (Total USDe Supply × Percentage of Staked USDe)
The growth in Ethena's total value locked (TVL) is entirely attributable to the rise in sUSDe. With the allocation to sUSDe increasing from 50% to 80%, more yield farmers began staking USDe to capture higher absolute sUSDe yields. This caused the percentage of staked USDe to rise from 16% to 39%, driving a corresponding increase in sUSDe supply. In fact, staked USDe (up $680 million) grew faster than the total USDe supply (up $610 million) and accounts for all of Ethena’s TVL growth.
Source: Ouroboros Research
sUSDe currently offers a ~16% annualized yield. The yield displayed on Ethena’s website is based on last week’s revenue and sUSDe supply. Given the rapid growth of sUSDe, we estimate the current annualized yield at approximately 16%, calculated using the current flow of USDe rewards and the amount of staked USDe.
Source: Ouroboros Research
Capture yield when sUSDe annualized yield increases. While we consider the current 16% sUSDe yield relatively low, it reflects subdued funding rates of 5–10%, which have limited protocol revenue. We expect rising funding rates as the ETH ETF launch date approaches, which should drive up sUSDe yields. For every 5% increase in funding rates, sUSDe annualized yield should rise by approximately 9%. Currently, the borrowing rate for sUSDe loop strategies is around 15%, slightly below the present 16% yield. However, as sUSDe yield climbs, looping strategies could deliver high returns.
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Hyperliquid Extends Points Program: Bullish for PURR
Actionable Insight: Go long PURR and participate in Hyperliquid’s points program.
Points program extended. Hyperliquid has announced an extension of its points program, expanding its goal from building a high-performance perpetual decentralized exchange (perp DEX) to supporting a Layer-1 (L1) financial system. Previously, Hyperliquid distributed about 4 million points to early users and allocated 26 million points over 26 weeks. From May 1 to May 28, it distributed 2 million points per week, followed by 700,000 points per week over the next four months.
Source: Ouroboros Research, Hyperliquid announcement
Earn points using spot products. While this extension dilutes existing point holders, we acknowledge the product suite will expand significantly. The final two cycles of the previous points season rewarded activity on its spot products—specifically buying and holding PURR. We expect this new "L1 season" to similarly reward 1) holding spot tokens, 2) purchasing spot tokens, 3) trading spot tokens, and/or 4) deploying spot tokens.
PURR benefits. We previously viewed PURR as a proxy for Hyperliquid’s product progress. That view remains unchanged, as PURR represents approximately 90% of Hyperliquid’s spot token market cap and stands to benefit from the new points season.
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Political Memes: Upcoming Catalysts
Actionable Insight: Go long political memes ahead of the November 2024 U.S. presidential election; monitor Trump’s wallet.
Politicians are embracing crypto. On May 8, Trump stated he would accept cryptocurrency donations. On May 25, he reaffirmed his support for crypto, declaring, “Our country must lead in this field—there is no second place.” On May 29, Biden also expressed friendlier views toward cryptocurrency. This momentum boosted the price of TRUMP token, which now has a $600 million market cap—tripling since its early-May lows.
Source: Dexscreener, Le Monde
Price chart and timeline align
Political memes correlate with event visibility. The initial price surge in March coincided with Trump securing the Republican presidential nomination. Upcoming catalysts include the Biden-Trump debate on June 27 and the Republican National Convention from July 15–18. As the U.S. presidential election draws nearer, public appearances, media coverage, and debates are likely to drive further price appreciation in political memes.
Source: Arkham
Monitor Trump’s wallet. Trump’s wallet currently holds $11.7 million, including $7.5 million in TRUMP tokens and $3.2 million in ETH. Any sale of TRUMP tokens could act as a negative catalyst.
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