The team behind USDe, Ethena Labs, has added Bitcoin (BTC) as collateral to its synthetic dollar-pegged product, aiming to scale significantly from its $2 billion supply.
Bitcoin’s inclusion comes amidst a surge in Bitcoin open interest from $10 billion to $25 billion on major crypto exchanges, enabling USDe to scale by 2.5 times, as per Ethena’s announcement on X.
USDe launched on Ethereum on Feb. 19, initially offering a 27.6% annual percentage yield (APY), which raised concerns. However, its APY has now stabilized at 7.15% after peaking at 113% on March 5.
Ethena believes that adding Bitcoin will enhance liquidity and provide a safer and more robust product for USDe holders. They employ a delta hedging strategy in Bitcoin’s derivatives market to maintain USDe’s peg.
Before this addition, USDe was backed by Ether (ETH), Tether (USDT), and Ether-based liquid staking tokens. Ethena sources most of its collateral from platforms like Binance, ByBit, and OKX.
Although Bitcoin lacks native staking rewards like Ether, Ethena argues that staking yields are less critical during bull markets. They aim to differentiate USDe from stablecoins by reducing reliance on traditional banking.
Ethena is trying to differentiate its synthetic dollar product from stablecoins by eliminating, or significantly reducing reliance on the traditional banking system.
