Ethena Labs' new offering is projected as a complementary product to the synthetic USDe dollar.
Key Takeaways
- Ethena Labs' new UStb stablecoin is fully backed by BlackRock's BUIDL fund.
- The ENA governance token surged 14% following the UStb announcement.
Ethena Labs, the startup behind the synthetic USDe dollar, has announced a new stablecoin called UStb that will be fully backed by BlackRock’s on-chain BUIDL fund. The move expands Ethena’s stablecoin offerings and aims to provide additional stability options for users and exchange partners.
https://x.com/ethena_labs/status/1839259051030630757
UStb will function similarly to traditional stablecoins, with its reserves invested in BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL). The BUIDL fund itself holds US dollars, US Treasury bills, and repurchase agreements, providing a stable backing for the new stablecoin.
UStb as complement to USDe
According to Ethena, UStb will exist as an independent product with a different risk profile compared to USDe. While USDe is a synthetic stablecoin that maintains its $1 peg through cash-and-carry arbitrage, UStb aims to offer a more traditional stablecoin structure backed by real-world assets.
The company stated that UStb can support USDe during challenging market conditions. Ethena’s governance structure allows for the reallocation of backing assets from USDe to UStb when needed, potentially mitigating risks associated with negative funding rates.
“UStb can also help USDe better weather difficult market conditions,” Ethena Labs claimed in a press release. “During periods of negative funding, the company can close hedging positions underlying USDe and reallocate its reserve assets to UStb.”
Exchange integrations and market impact
Ethena plans to list UStb on centralized exchanges like Bybit and Bitget, where USDe is already used as margin collateral. The addition of UStb will provide exchange partners with a choice between two distinct products for margin collateral, potentially broadening the adoption of Ethena’s stablecoin solutions.
Following the announcement, Ethena Labs’ ENA governance token experienced a significant price surge. Over the past 24 hours, ENA’s price increased by approximately 14%, climbing from $0.307 to $0.378. Trading volume also saw a notable uptick, reaching around $196.1 million.
However, the market capitalization of USDe, Ethena’s flagship product, saw a slight decline of $13 million to $2.54 billion on the day of the announcement. This decrease comes after USDe had previously surpassed $3 billion in market cap in June.
The introduction of UStb represents Ethena’s continued efforts to innovate in the decentralized finance (DeFi) space. The company aims to transform Ethereum into a crypto-native yield-bearing stablecoin ecosystem that operates independently of the traditional banking system.
Ethena’s approach involves leveraging delta-neutral strategies, on-chain custody, and derivatives to manage volatility and improve scalability and stability. The addition of UStb to its product lineup demonstrates the company’s commitment to providing diverse stablecoin options for users and exchange partners in varying market conditions.
Earlier this month, Ethena suffered a frontend attack, although its team has confirmed that no funds were harmed or stolen, with the damage limited to its user interface.