Ethena’s Synthetic Dollar USDe Exceeds $1B Supply
The first digitally-native synthetic dollar untethered to the traditional banking system publicly launched alongside a strategic fundraising round led by Dragonfly and Arthur Hayes just one month ago.
Just one month after Ethena Labs launched USDe, a crypto-native synthetic dollar, the total supply has exceeded 1 billion. This is the fastest time period in which a dollar based crypto asset has reached 1 billion dollars into mainnet. Backed by Dragonfly, BitMEX founder Arthur Hayes and every major derivative exchange in crypto, Ethena’s synthetic dollar USDe was brought to market alongside the value accruing “Internet Bond” sUSDe.
While USDe is a comparable asset to traditional stablecoins in certain aspects, the launch of USDe marks the debut of a new unique digital asset class: the synthetic dollar. USDe iterates on traditional stablecoin offerings by providing value accrual via sUSDe (the staked version of USDe) and with collateralized 1:1 with backing that is transparent, custodied and settled with institutional grade custodians.
Ethena employs a novel mechanism which uses spot ETH and liquid-staked ETH tokens as backing assets, and hedges that ETH exposure on perpetual futures markets 1:1 to create a synthetic dollar position. The protocol captures both the staked Ethereum yield inherent to liquid-staked ETH tokens alongside the basis in futures markets into a single position. As of last week’s sUSDe transfer, the protocol has earned an average, supply-weighted annualized yield of 37% during the three weeks since its public launch. To receive this value created by the protocol’s backing assets, USDe holders in permitted jurisdictions stake directly within the protocol smart contracts.
Guy Young, CEO and Founder of Ethena Labs stated: “Providing a crypto-native synthetic dollar alternative to stablecoins is, in our view, the single largest opportunity within the space, and the success of the last month has more than demonstrated the demand for this new type of asset which can potentially provide attractive risk-adjusted returns, and an uncorrelated risk profile to those stablecoins tethered to the traditional banking system.”
Unlike many crypto-backed stablecoins that tend to be overcollateralized and capital inefficient, USDe is collateralized 1:1, and custodied with institutional grade custodians such as Fireblocks, Copper, Ceffu, and Cobo. This ensures the collateral for the perpetual future positions backing USDe is not held on centralized exchanges or within DeFi smart contracts which can be prone to hacks, helping to reduce the counterparty risk of the design and enabling traditional finance entities to engage with the product on a scale which was not possible in DeFi before.
“USDe is the holy grail of cryptodollars: a coin that is stable, censorship-resistant and capital-efficient,” said Tom Schmidt, General Partner at Dragonfly. “Stablecoins have grown massively in popularity over the past few years by providing access to USD-denominated savings and remittances for people around the world, but they’ve always been handicapped by one of these three issues. Ethena’s breakthrough design remedies these issues while also benefiting a broad user base. We’re thrilled to partner with them to bring their vision to life.”
Arthur Hayes commented: “The progress Ethena Labs has made is truly impressive. Their TVL passed $1B in less than a month and I believe it will continue to see high demand. Ethena is on the warpath, aiming to disrupt the entire stablecoin ecosystem with its synthetic dollar protocol – and it has already proven to be a credible challenger to Tether.“
The project recently concluded a $14M strategic round led by Dragonfly with participation from Brevan Howard Digital, Franklin Templeton, and Avon Ventures, a venture fund affiliated with FMR LLC, the parent company of Fidelity Investments. Ethena was previously supported in earlier investment rounds by Binance Labs Incubation, and every major derivative exchange including Bybit via Mirana Ventures, OKX Ventures, Deribit, and Gemini, a first in crypto history.
To learn more, visit https://ethena-labs.gitbook.io/ethena-labs/
About Ethena Labs
Founded in 2023, Ethena Labs is a research, development, and engineering firm building infrastructure supporting the first ever scalable synthetic dollar alongside a value accruing “Internet bond”. The firm is backed by Dragonfly Capital, Arthur Hayes’ family office Maelstrom, every major crypto futures exchange including incubation from Binance Labs, Bybit, OKX, Deribit, Gemini and other leading investment firms including Brevan Howard Digital, Franklin Templeton and Avon Ventures, a venture fund affiliated with FMR LLC, the parent company of Fidelity Investments. The Ethena Labs team brings deep experience from both traditional finance and crypto, including from firms such as Cerberus, Wintermute, Flow Traders, Paradigm, Deribit, Lido, Aave, and Goldman Sachs.
Contacts
Camille Stephens
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