Ethena Labs, the creators of USDe, have recently announced the incorporation of Bitcoin (BTC) as backing into their synthetic dollar-pegged offering. This strategic move aims to boost USDe’s supply from its current $2 billion mark. Highlighted in an April 4 announcement, Ethena Labs emphasizes the importance of incorporating BTC as a backing asset due to its role in enhancing USDe’s scalability. The team points out BTC’s expanding open interest in major exchanges, which has surged from $10 billion to $25 billion over the past year, outpacing the growth of Ethereum (ETH) derivatives.
The integration of BTC as a backing asset brings various benefits to USDe. Ethena Labs recognizes BTC’s superior liquidity and scalability for delta hedging, providing a more secure environment for USDe users. Historical data also showcases BTC’s resilience during bear markets, demonstrating higher funding yields than ETH. While BTC lacks an inherent staking yield like staked Ether, Ethena notes that staking yields ranging from 3-4% are comparatively less impactful during bullish market conditions where funding rates can surpass 30%. This integration allows Ethena to use a delta hedging approach within the derivatives market to maintain USDe’s peg efficiently.
USDe was initially launched on the Ethereum blockchain on February 19 with an attractive 27.6% annual percentage yield (APY) on staked USDe. Despite reaching a peak of 113% APY on March 5, the yield has gradually decreased to 7.15%. The synthetic dollar-pegged offering was primarily backed by ETH, Tether (USDT), and Ether-based liquid staking tokens in proportions of 45%, 38%, and 17%, respectively. Collateral for USDe is predominantly sourced from Binance, ByBit, and OKX, comprising 59%, 15%, and 20% of the total, with the remaining 6% coming from Deribit, Bitget, and BitMEX.
USDe currently ranks fifth in market capitalization among U.S. dollar-backed products, following USDT, USD Coin (USDC), Dai (DAI), and First Digital USD (FDUSD), according to CoinGecko data. With the integration of BTC, Ethena Labs aims to strengthen USDe’s backing to provide a safer and more reliable product for its users. This move aligns with the company’s vision for the second season of the Sats Campaign, focusing on expanding BTC integration. Starting from April 5, users will have transparent access to BTC backing positions through Ethena’s dashboards, enhancing overall trust and accessibility for USDe users.