Ethena Labs’ synthetic dollar, USDe, has experienced a remarkable surge, surpassing a $2 billion market cap in less than two months since its launch on Ethereum’s public mainnet.
Introduced in February, USDe’s market cap has soared by over 147% in the past 30 days, as reported by DefiLlama. CoinGecko ranks USDe as the fifth-largest token in the stablecoin market.
USDe distinguishes itself from traditional stablecoins by being a yield-bearing crypto that utilizes derivative hedging against collateral positions denominated in Bitcoin (BTC), Ethereum (ETH), ETH liquid staking tokens, and Tether (USDT), rather than holding cash reserves to maintain its peg to fiat currencies like the U.S. dollar.
With a $2 billion supply and market cap, Ethena’s synthetic dollar has surged ahead of established stablecoins. Currently, only USDT, Circle’s USD Coin (USDC), DAI, and First Digital USD (FDUSD) eclipse USDe among stablecoin options.
However, industry experts are drawing parallels between USDe and Luna UST, Terra’s algorithmic stablecoin, which experienced a $60 billion collapse in May 2022. Blockchain developer Andre Cronje and CryptoQuant’s Founder and CEO Ki Young Ju have raised concerns about whether USDe’s features and reliance on BTC as a backing asset could lead to a similar scenario.
Despite its rapid ascent, the cryptocurrency community remains cautious, closely monitoring USDe’s trajectory and its potential implications in the broader crypto market.
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