Bitcoin

USDe

when

April

Ethena

Bitcoin (BTC) has been added as collateral to Ethena Labs’ synthetic dollar-pegged product with the intention of scaling significantly from its current $2 billion supply. Over the past year, Bitcoin’s open interest increased from $10 billion to $25 billion on major crypto exchanges. According to Ethena’s April 4 post on X, USDe can scale by a factor of 2.5 if backed by Bitcoin.
Excited to announce that Ethena has onboarded BTC as a backing asset to USDeThis is a crucial unlock which will enable USDe to scale significantly from the current $2bn supply Why Bitcoin? 
On February 19, USDe went live on Ethereum. There were widespread concerns in the community at the time because Ethena promised a 27.6% annual percentage yield (APY) on staked USDe. On March 5, USDe’s APY peaked at 113% but it has fallen to 7.15% since then.
Ethena said <a href="https://news.todayq.com/btc-soars-3-despite-grayscales-85mln-bitcoin-sell-off/" target="_blank" rel="noopener noreferrer nofollow">Bitcoin</a> would provide better liquidity and offer a more “safe” and “robust” product for USDe token holders. “BTC derivative markets are growing at a faster pace than ETH and offer better scalability and liquidity for delta hedging.”
To maintain USDe’s peg, Ethena employs a delta hedging strategy in the derivatives market.
Ethena may, for example, hold short positions in Ether or Ether-based derivatives, which are rewarding when Ether’s price falls. Thus, Ethena is able to offset USDe’s collateral volatility to a significant extent.
USDe was backed by Ether (ETH), Tether (USDT) and Ether-based liquid staking tokens in proportions of 45%, 38% and 17% prior to the addition of Bitcoin.
In proportions of 59%, 15%, and 20%, Binance, ByBit, and OKX provide the firm with the majority of its collateral. Deribit, Bitget and BitMEX make up the remaining 6%.
Despite the fact that Bitcoin does not have a native staking yield, Ethena says staking yields of 3-4% are “less significant” during bull markets when funding rates exceed 30%.
As part of its strategy to differentiate from <a href="https://news.todayq.com/uk-set-to-introduce-new-rules-on-stablecoins-and-crypto-staking/" target="_blank" rel="noopener noreferrer nofollow">stablecoins</a>, Ethena wants to eliminate or reduce reliance on traditional banks.
USDe is currently ranked fifth among United States dollar-denominated products, according to data from CoinGecko. USDe was backed by ether tokens only 
Ethena Labs’ website shows USDe was backed solely by ether liquid staking tokens until now. However, token holders are more interested in trading bitcoin.
In the past year, bitcoin open interest has surged 150% to $25 billion, doubling USDe’s capacity to scale, Ethena says. During the same period, ether’s open interest grew just 100% to $10 billion, according to protocol data.
A spectacular run-up in Bitcoin’s speculative value has contributed to Bitcoin’s comparatively strong demand. Bitcoin is trading at $67,931 at the time of writing, Coingecko data shows, up 3.2% over the past 24 hours. Whereas USDe is currently changing hands at $1 up 0.3% in the past day.

Ethena makes Bitcoin move, Will it take ENA over $2?

Todayq News

Other articles published on Apr 5, 2024

Binance Wallet and BTC L2 project BEVM launch an exclusive airdrop

Binance trading volumes hit yearly high at $1.12T in March

Dogecoin: Why DOGE prices are dropping despite memecoin mania

Increased Venture Capital Interest in Cryptocurrency Projects

Top 3 Altcoins to Watch This Week: Solana (SOL), Hump (HUMP), Dogecoin (DOGE)

Top 8 SocialFi Projects

Join our free newsletter for daily crypto updates!