Ethena Labs, the issuer of USDe, has added Solana (SOL) as collateral for its “synthetic dollar.”
The official token contracts are below, do not interact with any others:
USDe: https://t.co/KrR2HFgk6B
ENA: 72QvBVwpxqmheEPfaCwWSWqEFsUy3rhWt6JhQBMNTwD1
sUSDe: Eh6XEPhSwoLv5wFApukmnaVSHQ6sAnoD9BmgmwQoN2sN
— Ethena Labs (@ethena_labs) August 7, 2024
Previously, users could only use Bitcoin, Ethereum, stETH, or USDT as collateral for the stablecoin.
The integration with the Solana blockchain significantly broadens USDe’s audience, allowing users to buy and sell the asset within this network, according to the team.
“The partnership will increase the adoption of USDe and sUSDe, providing a whole new market of traders with the latest reward-accruing token. […] It will also attract an additional $2 billion to $3 billion in open interest in the SOL futures market,” the statement reads.
According to developers, since Bitcoin was added as collateral, the capitalization of the “synthetic dollar” has grown by more than $1 billion.
Collateral assets are used to open equivalent short positions on perpetual contracts. Through rewards received from long holders in the form of funding rates, Ethena Labs can offer an attractive yield of 12.3% per annum in USDe.
The stablecoin’s architecture is based on a delta-neutral trading and portfolio management strategy popular in TradFi.
This strategy is often employed in the options market to manage risks associated with changes in the underlying asset’s price. It is a variant of Cash–and–Carry trading and is considered safe under favorable conditions.
As of May 24, the collateralization level of USDe stood at 101.74%, according to the issuer. In other words, the asset can be redeemed if every user decides to liquidate it.
On August 5, amid market turbulence, the redemption volume of the “synthetic dollar” by its issuer Ethena Labs exceeded $100 million.
Guy Young, the founder of Ethena Labs, assured that each stress test, like this one and others we have faced this year, provides additional assurances of the system’s resilience.
CryptoQuant advised USDe holders to monitor the stablecoin’s reserve fund. According to calculations, the structure can be maintained if the capitalization of the “synthetic dollar” does not exceed $3 billion under negative funding rates.
Earlier, experts examined the asset’s vulnerabilities during extreme market fluctuations.