Ethena Labs to Scale USDe Stablecoin with Bitcoin Backing
Ethena Labs has announced plans to scale the USDe stablecoin by adding Bitcoin as an additional backing asset.
In their latest social media posts, Ethena shared that integrating Bitcoin as a backing asset aims to increase USDe’s current stability of $2 billion. This update seeks to leverage Bitcoin‘s liquidity to enhance the stablecoin’s existing framework.
The announcement suggested that following USDe’s significant expansion since its inception, Ethena’s hedges now account for approximately 20% of Ethereum’s open interest.
“With $25bn of BTC open interest readily available for Ethena to delta hedge, the capacity for USDe to scale has increased >2.5x,” said Ethena Labs.
“In just 1 year, BTC open interest on major exchanges (exc. CME) has grown from $10bn to $25bn, while ETH OI has grown from $5 to $10bn,” said Ethena Labs.
The announcement also elaborated that Bitcoin derivative markets outpace Ethereum‘s in growth, providing enhanced scalability and liquidity for delta hedging.
BTC also provides a better liquidity and duration profile vs liquid staking tokens
As Ethene scales closer towards $10bn this provides a more robust backing, and ultimately a safer product for users
— Ethena Labs (@ethena_labs) April 4, 2024
“As Ethene scales closer towards $10bn this provides a more robust backing, and ultimately a safer product for users,” the post reads.
Regarding the potential shortcomings of backing USDe with Bitcoin, the company stated that even if Bitcoin “does not possess a native staking yield like staked ETH, staking yields of 3-4% are less significant in a bull market when funding rates are >30%.”
Therefore, according to Ethena Labs, the current market is “ideal for optimizing for the scalability of USDe.”
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