Stablecoins have become a critical part of crypto infrastructure, and Ethena aims to change the existing order with its product USDe.
Transition to a New Stablecoin Paradigm
Current data shows that stablecoins like Tether and USDC have over $160 billion in circulation, serving as a backbone for the industry. However, their dependence on fiat reserves raises questions about their stability and accessibility. Ethena, by creating USDe, moves away from the traditional model, offering a synthetic dollar that does not rely on banks.
Mechanism of USDe
Ethena's model includes three layers: 1) collateral. Users can mint USDe using ETH, BTC, and other tokens. 2) yield. Ethena captures profits from long positions in derivatives markets. 3) risk management, including spreading hedges and independent collateral custody.
Ethena's Growth and Expansion in Financial Markets
In less than a year, the supply of USDe surpassed $12 billion. Ethena has successfully penetrated various segments, from DeFi to TradFi. The notable integration with Binance and the launch of the USDtb version for traditional finance facilitated the rapid adoption of USDe.
Ethena with USDe marks a significant milestone in the evolution of stablecoins, raising questions about whether they should remain mere digital mirrors of the US dollar or evolve into income-generating assets.
