USDe OF ETHENA BECOMES THE THIRD LARGEST STABLECOIN BY MARKET CAPITALIZATION 🔥🚨
USDe, the yield-bearing stablecoin issued by Ethena Labs, has surpassed FDUSD to become the third largest dollar-pegged token, after a 75% surge in market capitalization since mid-July brought the circulating coins to approximately $9.3 billion. The demand for USDe has increased following the approval of the GENIUS Act, the first comprehensive U.S. legislation for stablecoins. The subsequent custody partnership of Ethena with Anchorage Digital for the issuance of synthetic dollars in U.S. markets as a GENIUS-compliant stablecoin has likely supported the supply increase.
The overall supply of dollar tokens has risen for seven consecutive months. Only Tether's $164 billion USDT and Circle's $63 billion USDC boast larger market capitalizations than USDe among stablecoins.
Ethena launched USDe in early 2024 with a delta-neutral design that matches on-chain collateral with short positions of perpetual swaps. The model, designed to maintain a $1 peg, faced skepticism due to high yield spikes and collateral volatility in its early days. Skeptics have also compared the token to Terra's UST cryptocurrency, which collapsed in 2022 due to its algorithmic design and lack of full backing. However, the USDe system differs from UST's algorithmic mechanism. UST was not fully backed and relied on supply and demand algorithms, while USDe is fully supported by cryptocurrencies and covered positions. Additionally, Ethena has since added exchange partners to expand liquidity, diversified collateral to include assets like Bitcoin and major stablecoins like USDT, and adopted third-party attestations.
The Ethena protocol is the seventh largest in decentralized finance, with approximately $9.4 billion currently locked in its contracts.
