Understanding the Strategic Move by Arthur Hayes with USDe 🌐
This year, the Maelstrom Fund devised by Arthur Hayes has opted to allocate 5% of its assets into USDe (Ethena USD) as a safeguard against the unpredictability surrounding the US elections. Hayes noted that this investment is generating an impressive return of approximately 13%.
Arthur Hayes and the Hedge Against Election Uncertainty 🗳️
Ethena USD, also referred to as USDe, represents the stablecoin of the Ethena protocol. Presently, it stands as the fourth largest stablecoin globally in terms of market capitalization, following the well-established players—USDT, USDC, and DAI/USDS—with only a slight lead over FDUSD.
Launched in February of this year, USDe is still relatively new to the market, yet it has already climbed to a prominent position, distinctly outpacing even PayPal’s digital currency.
Notably, USDe isn’t your typical crypto-dollar. It differs from conventional stablecoins that maintain a one-to-one dollar collateralization. Instead, it operates as a synthetic stablecoin pegged to the dollar and functions on Ethereum, targeting specifically the DeFi sector.
This stablecoin generates a native annual percentage yield (APY) of 13%, a benefit that traditional dollar-collateralized stablecoins typically cannot match.
The stability of USDe’s value is upheld through strategic derivative positions that hedge the protocol’s collateral, further reinforced by an arbitrage mechanism to stabilize the coin’s price.
Currently, USDe’s collateral, which supports its $2.6 billion market valuation, comprises:
- 52% Bitcoin
- 21% Ethereum (ETH)
- 16% other stablecoins
Insights on the Maelstrom Fund Managed by Arthur Hayes 📈
Arthur Hayes is the co-founder of BitMEX, and he manages the Maelstrom Fund through his family office. This fund focuses on cultivating a long-term investment portfolio, consisting of infrastructure companies poised to aid in the upcoming wave of decentralization.
The Maelstrom Fund holds a diverse array of investments, including its stake in Ethena. Hayes boasts a significant track record within the cryptocurrency domain, having established BitMEX nearly a decade ago.
Despite stepping back from direct management of BitMEX due to legal challenges, he has remained active in the crypto space, particularly with his personal investments.
Examining Maelstrom’s Stake in USDe 💹
Unlike traditional stablecoins that are fully backed by fiat, USDe operates differently, arguably introducing more risk than options like USDT and USDC. However, USDe shares similarities with DAI (now USDS), with a notable advantage: USDe offers yield through its APY, while USDS does not provide an embedded yield mechanism.
This variable yield feature might explain why the Maelstrom Fund has selected to invest in USDe. It’s essential to keep in mind that the current 13% APY is subject to fluctuations rather than being a guaranteed rate.
Hayes revealed that the fund has chosen to deploy 5% of its assets into USDe on account of the prevailing uncertainty surrounding the upcoming American elections.
Anticipating the Presidential Elections: Current Favorites 🏛️
Currently, Donald Trump appears to have a slight edge over Kamala Harris in the electoral race, yet this advantage brings its own set of uncertainties. Hayes expressed a belief that regardless of the election outcome, the cryptocurrency markets will trend similarly over the long haul, though short-term reactions may diverge significantly.
Post-election, the Maelstrom Fund plans to liquidate its USDe holdings to acquire cryptocurrencies. Hayes articulated his viewpoint that both candidates might adopt expansive monetary policies, leading to similar consequences for the crypto market in the medium term.
However, he suggested that a Trump victory might yield a more favorable response from both bullish and bearish market participants compared to a win for Harris. Speculation about leadership transitions could lead to market confusion, reinforcing the decision to position the fund cautiously with minimal or no leverage.
This strategy appears to be a prudent approach to safeguard against potential volatility, particularly if the election brings about outcomes reminiscent of the turmoil seen following Biden’s victory over Trump in late 2020 and early 2021.
In summary, the Maelstrom Fund’s choice to temporarily allocate a segment of its portfolio into USDe reflects a calculated strategy aimed at navigating the unpredictable electoral landscape while seeking to leverage the opportunities within the cryptocurrency realm.
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