The Ethena project’s synthetic dollar, USDe, has quickly reached a $3 billion supply in just four months since its launch. This achievement showcases the increasing demand for and confidence in stablecoins within the decentralized finance (DeFi) ecosystem.
Ethena’s Synthetic Dollar Breaks $3 Billion Barrier
USDe is a dollar-pegged stablecoin developed by Ethena Labs, leveraging ETH staking and derivatives management to generate returns. Operating on the Ethereum blockchain, USDE is fully backed on-chain and can interact with various blockchain protocols.
By June 2, USDE’s market cap had reached around $3.02 billion, surpassing First Digital’s FDUSD at $2.9 billion, making USDE the fourth largest stablecoin. Ethena’s founder, Guy Young, noted that USDe became the fastest USD asset in crypto history to achieve this milestone.
According to EtherScan, USDE is held by approximately 13,235 unique addresses. Ethena’s smart contract holds the largest portion with 1.22 billion USDE, accounting for over 40% of the total supply, while the LP staking address holds 511.2 million USDE, representing 16.8%. Key holders include Pendle Finance, Morpho, and Zircuit.
However, despite its rapid growth, concerns have been raised. DeFi expert Andre Cronje cautioned that USDe could face challenges similar to TerraUSD (UST) due to its use of perpetual contracts and reliance on yield-based collateral. CryptoQuant founder Ki Young Ju also questioned its ability to maintain a stable strategy during bear markets.
Yet, the project continues to attract interest. Currently offering a 33.5% annual percentage yield (APY) for USDe, Ethena has drawn in many DeFi enthusiasts. With 200,200 users already onboard, new participants still require an invitation code.
Conclusion
The swift ascent of USDe to a $3 billion supply in a short timeframe underscores the growing demand for innovative stablecoin solutions. Ethena’s success showcases the feasibility of synthetic stablecoins and establishes a new standard in the DeFi landscape, paving the way for future adoption.