Funding Rate Arbitrage

Ethena creates a digital dollar (USDe) that earns from fees paid by leveraged traders in cryptocurrency markets.

How it works:

• In crypto markets, traders can use "leverage" to control larger positions than their actual money (like controlling $1,000 with only $100)

• Traders who bet on prices going up (long positions) typically pay regular fees called "funding rates" to maintain these leveraged positions

• These funding rates are usually positive for popular assets like ETH and BTC, meaning long traders pay fees to short traders

• Ethena's USDe digital dollar is positioned to collect these funding rate payments

• Your money participates in collecting these fees from active traders

Why this works: Leveraged trading is extremely popular in crypto markets, with billions of dollars in daily volume. Traders are willing to pay these fees because leverage amplifies their potential profits. Since more people typically bet on crypto prices going up than down, the funding rates flow consistently to those providing the other side of these trades.

Example: If Bitcoin traders are paying 0.1% daily funding rates to maintain their long positions, that equals about 36% annually. Ethena captures these payments and shares them with USDe holders.

Through FIVA: You get exposure to these funding rate earnings through a simple fixed-rate deposit, without needing to understand complex trading strategies or manage positions yourself.