Ethena, a decentralized finance (DeFi) platform, is about to launch a brand new stablecoin named UStb in partnership with the real-world asset tokenization platform, Securitize.
UStb is designed to function like conventional stablecoins, however with a key distinction: its reserves will likely be invested in BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL), a tokenized funding on the Ethereum blockchain.
This fund primarily invests in U.S. {dollars}, short-term U.S. Treasury payments, and repurchase agreements, which gives a extra secure and diversified method in comparison with many different stablecoins in the marketplace.
Backing and Risk Management
BlackRock’s BUIDL fund, launched in March 2023, has grown quickly, amassing over $522 million in property below administration (AUM). It has grow to be the biggest tokenized U.S. Treasury fund available in the market, reflecting the rising demand for tokenized authorities securities. According to knowledge from asset administration agency 21.co, the overall marketplace for tokenized authorities securities has surpassed $2 billion.
Securitize, a platform recognized for its involvement in tokenizing investments, manages over $950 million in tokenized property throughout main funds, together with BlackRock, Hamilton Lane, and KKR.
UStb as a New Offering
While UStb affords stability by its backing by BlackRock’s fund, it’s designed to function independently from Ethena’s present stablecoin, USDe. The USDe, which launched in February, differs from conventional stablecoins in that it makes use of by-product hedging methods moderately than being straight backed by fiat or bodily property. The USDe stablecoin depends on a mix of cryptocurrencies resembling ether (ETH), bitcoin (BTC), and solana (SOL) as collateral and maintains its peg by an arbitrage-based minting and redeeming system.
However, USDe carries sure dangers, together with publicity to risky derivatives markets and the efficiency of its crypto-backed reserves. It briefly misplaced its peg in August 2023 throughout a crypto market downturn, dipping to $0.997 earlier than recovering.
In response to such dangers, Ethena Labs views UStb as a option to bolster the USDe stablecoin. According to Ethena’s group, in periods of unfavorable market circumstances, property backing USDe will be reallocated to UStb to assist stabilize the system.
A Diversified Approach
Ethena’s new UStb will likely be obtainable as a substitute type of collateral on centralized exchanges resembling Bybit and Bitget, the place merchants can use it for margin buying and selling. This gives customers with a lower-risk choice in comparison with USDe, which is uncovered to extra risky market circumstances attributable to its reliance on derivatives and cryptocurrency collateral.
Ethena’s growth has attracted notable help, with the corporate elevating $14 million in a strategic funding spherical led by Dragonfly Capital and Arthur Hayes’ household workplace, Maelstrom, earlier this yr. Ethena’s complete valuation now sits at $300 million.
