Full dollar synthetic stablecoins really the magic bullet everyone is trying to claim that it is, to change the lives of young Africans. Not much to this, right? It seems like the kind of pie-in-the-sky promise that never materializes, doesn’t it? Let's unpack this. Ethena’s USDe, and especially its yield-bearing sUSDe, is being marketed as an “Internet Bond.” The more important question is whether this “Internet Bond” can truly deliver on its promise to empower a continent frequently ignored by conventional finance. I do believe it can — but with some key caveats.
A Dollar Haven For Unbanked Millions?
Imagine a young entrepreneur in Lagos, Nigeria. With her local currency in his own words, “devaluing like a leaky balloon,” she is unable to save and plan for the future. Traditional banking is out of reach or plagued with fees that devour her limited savings. Now, imagine her being able to use her smartphone to easily access sUSDe. This dollar-denominated asset provides an opportunity to pick up a fairly attractive yield. That's the promise we're talking about here.
The power of the idea to provide a globally accessible, dollar-denominated savings vehicle cannot be understated. Consider it a digital hedge fund, providing a hedge against inflation and currency devaluation. It provides a much-needed focus on fiscal responsibility. By leveraging the innovation and power of DeFi, it opens doors to the historically underserved.
Ethena’s sUSDe yields accrue from ETH staking rewards and funding rates in ETH derivatives markets. Historically, this has resulted in attractive returns. Those funding rates can change direction, often resulting in substantial losses. Sure, Ethena touts its delta-neutral hedging strategy, but that doesn’t make it infallible. Market volatility is a constant threat.
High Yields, High Stakes For African Youths?
Are we really suggesting that young Africans, who are often financially vulnerable, should dive headfirst into a complex DeFi product with inherent risks?
That's a valid concern. We can’t simply apply technology to a problem and make it go away. Education is paramount. What we do need to do is to put people in control of the information they require to assess the risks and benefits and make educated choices. Community-led initiatives, educational resources focused on the African context, and ethical marketing are needed.
We have to recognize the centralized exchange (CEX) risk. First, because Ethena depends on CEXs for its derivative positions, it is vulnerable to counterparty risk. Custodial risks are a factor. These are not academic or abstract concerns — these are real world challenges that should be addressed honestly and transparently.
Ultimately, the success of USDe and sUSDe in Africa is dependent on more than the underlying tech. It requires a broader ecosystem of support, including:
This isn’t simply a fintech story, it’s an empowerment story. It’s about investing in young Africans so they can start doing the work of creating a more prosperous future for themselves, their families and their communities. It’s a question of democratizing access to financial opportunity and creating a more level playing field.
- Market Volatility (Negative Funding Rates)
- Reliance on Centralized Exchanges (Counterparty Risk)
- Custodial Risks
- Smart Contract Vulnerabilities
- Regulatory Challenges
Beyond Tech: A Vision For Africa's Future?
The very notion of an “Internet Bond” that’s available to anyone with a smartphone is just mind-blowingly powerful. If Ethena is able to go through these risks and educate its users, it can foster a healthy community. If so, USDe and sUSDe have the potential to be important tools for increasing financial inclusion across Africa.
- Education: Accessible and culturally relevant DeFi education programs.
- Infrastructure: Improved internet access and smartphone penetration.
- Regulation: Clear and supportive regulatory frameworks that foster innovation while protecting consumers.
- Community: Strong community involvement to build trust and address concerns.
These are just a few reasons why I think you should check out Ethena and sUSDe, but do your own research. Understand the risks involved. This is not financial advice.
Next, you’ve got to push for policies that support financial innovation and encourage financial inclusion across the continent. Let’s invest in innovative organizations that are working to help young people develop the knowledge and skills they need to thrive. Because the future of our world depends on Africa.
I encourage you to explore Ethena and sUSDe, but please, do your own research. Understand the risks involved. This is not financial advice.
Let's advocate for policies that promote financial innovation and inclusion in Africa. Let's support organizations that are working to empower young people with the knowledge and resources they need to succeed. Because the future of Africa depends on it.
