Arthur Hayes hedges against the USA elections with USDe by Ethena

The Maelstrom fund by Arthur Hayes has decided to invest 5% in USDe (Ethena USD) to protect itself from the uncertainty of the US elections. 

According to what Hayes stated, they are earning about 13%.

Arthur Hayes: staking of USDe against the uncertainty of the USA elections

Ethena USD (USDe) is the stablecoin of Ethena.

As of today, it is the fourth largest stablecoin in the world by market capitalization, behind the three historical ones (USDT, USDC, and DAI/USDS), although it only slightly surpasses FDUSD.

USDe is a young project, given that it debuted on the crypto markets only in February of this year, but it has already reached fourth place among the major stablecoins, surpassing even that of Paypal by a wide margin. 

The fact is that it is not a common crypto-dollar, that is, a token 100% collateralized in dollars representing the fiat currency on-chain, but a synthetic stablecoin pegged to the dollar.

In particular, it is a token on Ethereum that aims to provide a financial instrument especially useful for DeFi.

In fact, it manages to offer a native APY of 13%, something that stablecoins collateralized 100% in dollars cannot offer. 

The anchoring to the dollar value is maintained thanks to the opening of positions on derivatives to hedge the collateral held by the protocol, thus ensuring that the value remains constant. This is complemented by a minting and redemption arbitrage process, which further stabilizes the currency. 

At this moment, the collateral of the 2.6 billion dollar market capitalization of USDe is composed of 52% Bitcoin, 21% ETH, and 16% other stablecoins.

The Maelstrom Fund of Arthur Hayes

Maelstrom is a fund managed by the family office of BitMEX co-founder, Arthur Hayes, 

This fund is building a long-term portfolio of infrastructure companies that will serve as a foundation for the next wave of decentralization.

The companies they have in their portfolio are numerous, and among them is also Ethena itself.

Hayes has a long career behind him in the crypto sector, especially since he founded BitMEX about ten years ago. 

Due to a series of legal vicissitudes, Hayes was forced to leave the management of BitMEX a few years ago, but he continued to operate in the crypto sector, particularly with his personal funds.

Arthur Hayes: the investment of Maelstrom in USDe

Since USDe is not a stablecoin collateralized in dollars, or other fiat currencies, it should be considered riskier compared to those collateralized in dollars like USDT and USDC. 

However, it is not very different from DAI, now called USDS, but with the huge difference that USDe allows you to obtain a yield thanks to an APY, while USDS natively does not. 

This is probably the reason why Maelstrom decided to invest in USDe.

It should still be remembered that the current APY of 13% is not fixed, but it is a variable rate. 

Hayes stated that the Maelstrom fund decided to invest the USD and 5% of its funds.

The reason for this choice is the uncertainty caused by the American elections next week. 

Presidential elections coming up: who is the favorite?

Although it seems that at this moment Donald Trump is in advantage over Kamala Harris, this advantage is not enough to sweep away the uncertainty.

According to Hayes, in the long term, the crypto markets will behave in the same way regardless of who wins, but in the short term, they will not. 

In fact, they have also decided that, after the elections, when it is known for certain who will have won, Maelstrom will sell all the USDe purchased to buy criptovalute.

Hayes added that he believes both Trump and Harris would end up printing trillions of dollars, and that therefore in the medium term the consequences would be the same on the bull crypto market. 

Instead, in the short term, a victory for Trump should be received better by the bull and bear crypto markets compared to one for Harris. 

Furthermore, it argues that there might be confusion about who will be in charge, and for this reason, it advises sizing positions accordingly and using minimal or no leverage. Hence, probably the decision to temporarily move 5% of the fund to a stablecoin. 

In fact, it is a form of small coverage, especially for the possibility, possible but unlikely, that the outcome of next week’s elections could lead to further uncertainty in the short term. 

For example, it is not to be excluded that in the event of a Harris victory, something similar to what happened between the end of 2020 and the beginning of 2021 when Trump was defeated by Biden could occur.