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Bitcoin backing diversifies the $USDe stablecoin, Ethena Labs claims.
Ethena Labs, the decentralized finance (DeFi) protocol behind the $USDe synthetic dollar, has announced the addition of Bitcoin as a backing asset for its stablecoin. The move is aimed at enabling $USDe to scale significantly and provide a safer product for users, as traders increasingly embrace the resurgence of the world’s oldest cryptocurrency.
The decision to include Bitcoin as a collateral asset comes as Bitcoin derivative markets outpace their Ether-based counterparts. According to data cited by Ethena, Bitcoin open interest surged 150% to $25 billion in the past year, while Ether’s open interest grew by only 100% to $10 billion during the same period. This substantial liquidity and increased scaling potential offered by $BTC derivative markets are key factors driving Ethena’s strategic move.
“$BTC also provides a better liquidity and duration profile vs liquid staking tokens. As Ethena scales closer towards $10bn this provides a more robust backing, and ultimately a safer product for users,” the protocol said in an X thread.
$USDe’s current supply is worth roughly $2 billion, and the protocol estimates that backing $USDe with Bitcoin could enable it to scale by a factor of more than 2.5. This is particularly important as Ethena’s short futures positions, used to hedge the protocol’s ETH exposure, have ballooned to 20% of total Ether open interest.
Although Bitcoin does not offer a native staking yield like Ether, Ethena highlighted its superior liquidity and duration profile for delta hedging. Moreover, in a bull market where funding rates exceed 30%, staking yields become less significant, making Bitcoin an attractive backing asset.
The inclusion of Bitcoin as a collateral asset is expected to bolster the scalability and overall stability of $USDe. The Bitcoin integration will be reflected in Ethena’s dashboards starting Friday, April 7th.
Ethena’s newly launched ENA token, which was recently airdropped to users, is currently trading at around $1, giving it a market capitalization of $1.5 billion. The protocol’s total value locked (TVL) is approaching $2 billion, showcasing the rapid growth and increasing demand for $USDe.