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Highlights
- Ethena Labs now includes Bitcoin as a backing asset for the USDe synthetic dollar to improve scalability and safety.
- The shift towards Bitcoin is due to its superior liquidity and hedging benefits over Ethereum-based derivatives.
- Bitcoin's open interest has surged 150% to $25 billion, doubling USDe's expansion capacity.
Ethena Labs announced the inclusion of Bitcoin as a backing asset for its USDe synthetic dollar. The DeFi protocol was communicated via X on Thursday. They aim to enhance the scalability and safety of their dollar-pegged token. This strategic move allows USDe to scale over 2.5 times its current capacity. It is in response to the growing trader interest in Bitcoin over Ethereum-based derivatives.
The decision leverages Bitcoin’s superior liquidity and hedging benefits. Ethena Labs highlighted Bitcoin’s advantageous liquidity and duration profile for delta hedging. Previously, USDe relied solely on ether liquid staking tokens for backing. The shift reflects a broader market trend favoring Bitcoin trades. Token holders have expressed a heightened interest in Bitcoin, which is influencing Ethena’s strategy.
Ethena Labs Chooses Bitcoin Over Ether Backing
Bitcoin’s open interest has significantly increased, surging 150% to $25 billion in the past year. This growth has doubled USDe’s capacity for expansion. In contrast, Ether’s open interest reported 100% growth, reaching $10 billion. The contrasting demand dynamics between Bitcoin and Ether underscore the rationale for Ethena’s strategic pivot. Bitcoin’s market performance remains robust, with its price currently standing at $68,026, marking a 3.3% rise in 24 hours.
Ethena Labs has also entered a partnership with Ceffu, aiming to enhance off-exchange settlement and liquidity. Since Ethena’s public launch in February 2024, this collaboration has integrated the MirrorX solution with Binance Exchange. It offers institutional clients like Ethena the advantage of frequent derivatives position settlements. Additionally, it broadens access to a diverse range of products and markets on Binance.
USDe Backed by Bitcoin Boosts Market Safety
Ethena Labs’ initiative to back USDe with Bitcoin aims to foster a more robust and safer trading environment. As the protocol approaches a $10 billion scale, the Bitcoin backing offers stronger support for USDe, which currently stands at approximately $2 billion. This strategic move is set to increase the token’s scalability and safety for users significantly.
The collaboration with Ceffu through the MirrorX solution represents a key development in accessing centralized liquidity. Guy Young, CEO of Ethena Labs, expressed enthusiasm for the partnership’s role in enhancing off-exchange settlements. Ian Loh, EVP of Ceffu, also emphasized the added value of MirrorX in improving capital allocation and reducing exposure on Binance. This strategic direction not only bolsters USDe’s market position but also aligns with evolving trader preferences for Bitcoin.
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