The Rise of Ethena’s USDe Stablecoin
Ethena’s synthetic USDe dollar has emerged as the fastest-growing USD-pegged stablecoin over the past 30 days after its market capitalization skyrocketed 73% to an all-time high of $4.77 billion.
Surpassing the Competition
- USDe has become the third-largest stablecoin, surpassing DAI’s market cap.
- Still lags behind Tether’s USDT and Circle’s USDC.
“We are beginning to now see the effects as USDe blackholes every stablecoin in DeFi while warping lending markets to a new base rate. However, it has become evident that DeFi is insufficiently sized at the moment to close the arb entirely and larger pools of capital are required. The next step for Ethena is plugging directly to $100b-1tn+ asset managers who can provide the capital required.” – Guy Young, Ethena Labs co-founder and CEO
Continuous Growth
The rapid growth mirrors the momentum seen earlier this year when USDe’s market cap hit the $3 billion mark just four months after its public launch in February.
Factors Driving USDe’s Growth
- Strong dynamics fueled by bullish sentiment and demand for alternative yield-bearing assets.
- Majority of USDe tokens are held for earning rewards, indicating a view of USDe as a yield-generating asset.
- USDe offers attractive yields through Ethereum staking rewards hedged against short funding rates for ETH.
Some critics draw parallels between Ethena’s model and the ill-fated Terra-Luna project, which collapsed in 2022 due to unsustainable growth strategies.
Despite criticisms, demand for USDe remains high, with supply and borrow APR rates outpacing those of USDT and USDC on Aave.
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