Developer Andre Cronje published a post questioning whether Ethena will be the next UST.

In a post on X on April 3, Cronje compared Ethena (USDe) to the infamous UST stablecoin.

“UST I had a high degree of confidence would fail, the simply mechanisms didn’t make sense to me, however, a lot of people I consider to be very smart were very vocal about how it can’t fail, this reached a point where I was convinced “I was wrong.”

Cronje analyzed the structure of perpetual contracts, a derivative product that allows traders to speculate on the price movements of an asset without holding the asset. He highlighted a critical vulnerability in this system: the dependence on income-generating assets such as staked Ethereum (stETH) as collateral.

By drawing a parallel between the structural flaws he sees in USDe’s system and the mechanisms that led to Terra’s downfall, Cronje raises a red flag about the sustainability of complex financial products that lack transparent risk mitigation strategies.

Responding to Cronje’s criticism, Ethena Labs founder Guy Young, also known as Leptokurtic, acknowledged the validity of the concerns raised.

Yesterday, Ethena Labs announced the launch of its governance token, ENA, and the expansion of its yield-earning stablecoin, synthetic dollar token USDe. In addition, Ethena launched an airdrop of 750 million ENA.

Users who participate in the Shard Campaign can claim free tokens. The number of coins participants receive will be proportional to the ‘shards’ or points accumulated before April 1.