Ethena Labs provides Bitcoin as a backing asset for USDe to boost scalability and security

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Ethena Labs, the decentralized finance (DeFi) protocol behind the USDe artificial greenback, has introduced the addition of Bitcoin as a backing asset for its stablecoin. The transfer is geared toward enabling USDe to scale considerably and supply a safer product for customers, as merchants more and more embrace the resurgence of the world’s oldest cryptocurrency.

The choice to incorporate Bitcoin as a collateral asset comes as Bitcoin spinoff markets outpace their Ether-based counterparts. Based on information cited by Ethena, Bitcoin open curiosity surged 150% to $25 billion previously yr, whereas Ether’s open curiosity grew by solely 100% to $10 billion throughout the identical interval. This substantial liquidity and elevated scaling potential provided by BTC spinoff markets are key elements driving Ethena’s strategic transfer.

“BTC additionally gives a greater liquidity and length profile vs liquid staking tokens. As Ethena scales nearer in direction of $10bn this gives a extra sturdy backing, and finally a safer product for customers,” the protocol stated in an X thread.

USDe’s present provide is price roughly $2 billion, and the protocol estimates that backing USDe with Bitcoin might allow it to scale by an element of greater than 2.5. That is notably essential as Ethena’s quick futures positions, used to hedge the protocol’s ETH publicity, have ballooned to twenty% of whole Ether open curiosity.

Though Bitcoin doesn’t provide a local staking yield like Ether, Ethena highlighted its superior liquidity and length profile for delta hedging. Furthermore, in a bull market the place funding charges exceed 30%, staking yields turn into much less vital, making Bitcoin a beautiful backing asset.

The inclusion of Bitcoin as a collateral asset is anticipated to bolster the scalability and total stability of USDe. The Bitcoin integration shall be mirrored in Ethena’s dashboards beginning Friday, April seventh.

Ethena’s newly launched ENA token, which was just lately airdropped to customers, is at the moment buying and selling at round $1, giving it a market capitalization of $1.5 billion. The protocol’s whole worth locked (TVL) is approaching $2 billion, showcasing the speedy progress and rising demand for USDe.

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