Elixir Launches Decentralized Synthetic Dollar as Rival to Ethena Labs’ USDe

The Elixir team has introduced a “fully decentralized synthetic dollar” called deUSD, positioning it as a competitor to Ethena Labs’ USDe, reports The Block.

deUSD is designed to provide liquidity for order book-based decentralized exchanges (DEX).

Operating within the DeFi ecosystem, USDe relies on interactions with centralized exchanges and custodians.

Like Ethena Labs’ stablecoin, deUSD is also fully collateralized. It is created using stETH as collateral for Ethereum shorts in a delta-neutral position.

Stakers of deUSD can earn additional yield beyond the base rate through exchange incentives for providing liquidity, according to the project’s announcement.

The team claims to offer a “truly decentralized” on-chain and non-custodial alternative to USDe with verifiable execution proofs, open-source code, and no reliance on CEX.

According to the developers, deUSD also has the ability to maintain stability during periods of extreme negative funding rates compared to USDe.

“The network has undergone stress testing over the past two years. In deUSD, […] the dependency on market trends related to the basis and unstable income sources has been eliminated,” assured Elixir Labs founder and CEO Philip Forte.

The developers state they have agreements to raise $1 billion for the stablecoin. The asset will be supported by several DeFi protocols.

Among them is Pendle, which will create a market for Elixir’s Apothecary initiative. The latter is a point-based system to help users track their contributions to the project.

Since the program’s launch in March, users have locked over $300 million in Ethereum, according to the developers.

The assets provided grant the right to issue a cross-chain liquidity provider token with 1:1 collateral in ETH, earning Potions points.

The elxETH issued in this manner can be used as collateral on order book-based DEXs like Vertex, Bluefin, RabbitX, dYdX, ApeX, Orderly Network, SynFutures, and others.

Pendle tokenizes the Potion program, splitting the points into two different markets: one for users who want to buy and sell Potion directly, and another for those interested solely in income from the staking rewards generated by the program.

With the launch of deUSD, Apothecary contributors can choose to either mint the stablecoin using locked ETH once DEX support is operational or withdraw their coins. According to the team, asset withdrawal or conversion is possible at any time.

Ahead of the mainnet launch in September, Elixir was valued at $800 million.

In March, the startup closed a Series B funding round of $8 million, led by Mysten Labs and Arthur Hayes’ Maelstrom.

Ethena Labs’ USDe capitalization surpassed $3 billion just four months after launch—faster than any competitors.

CryptoQuant advised USDe holders to monitor this parameter. According to calculations, the reserve fund can be maintained under negative funding rates if the “synthetic dollar” capitalization does not exceed $3 billion.

Earlier, experts analyzed the asset’s vulnerabilities during extreme market volatility.