Ethena Labs, the creators of the Ethereum-based synthetic dollar protocol, have introduced a new stablecoin called UStb, backed by BlackRock’s USD Institutional Digital Liquidity Fund (BUILD). The launch, in collaboration with Securitize Markets LLC, offers users an alternative to Ethena’s existing USDe stablecoin and provides a distinct risk profile.
Backed by BlackRock’s Tokenized Fund
UStb’s collateral comes from BUILD, BlackRock’s first tokenized U.S. dollar fund, launched in March 2024 on the Ethereum blockchain. BUILD allows investors to earn interest through U.S. Treasury assets and other obligations. Managed by BlackRock, the fund has quickly become the largest tokenized U.S. Treasury fund, amassing over $522 million in assets under management (AUM).
Securitize Markets LLC, which specializes in tokenizing real-world assets (RWAs), supports the infrastructure behind BUILD, providing a pathway for investors to access these assets through blockchain technology.
UStb’s Stability and Differentiated Risk
UStb will be fully backed by BlackRock’s BUILD, ensuring stability and reliability, similar to traditional fiat-backed stablecoins. Users and exchange partners can rely on UStb as a secure, familiar asset. Unlike USDe, which uses a synthetic dollar mechanism and derivative hedging strategies, UStb offers a different risk profile for those seeking more conventional collateralization.
Ethena Labs acknowledged concerns from its community regarding USDe’s performance in adverse market conditions. Despite market challenges over the past six months, USDe has remained resilient, never experiencing a single week of negative funding rates. However, UStb will provide an additional option for users looking to mitigate risk further, especially during periods of weak funding.
Ethena Labs hinted at future plans to integrate UStb into its governance model, allowing the backing composition of USDe to be adjusted between basis positions and liquid stable products as needed.
Expanding Exchange Integrations
Ethena Labs continues to broaden its partnerships with centralized exchanges (CEXs). Beyond current integrations with platforms like Bybit and Bitget, the lab will offer CEX partners the choice of using either USDe or UStb as margin collateral. More details about UStb’s timeline and upcoming exchange partnerships will be announced soon.
USDe: A Synthetic Stablecoin with Unique Risks
Launched in February 2024, Ethena’s USDe has quickly risen in prominence, becoming the fifth-largest stablecoin by market capitalization with a circulating supply of $2.54 billion. Unlike traditional stablecoins, USDe relies on derivative hedging strategies and crypto collateral such as Bitcoin (BTC), Ether (ETH), and Solana (SOL) to maintain its peg to the U.S. dollar.
However, USDe’s unique approach comes with risks, including exposure to derivatives markets, counterparty risks, and collateral volatility. These risks were tested in August 2024 during a broader market selloff when USDe experienced $100 million in redemptions, briefly dipping to $0.997 before recovering its $1 peg.
Ethena Labs also faced a security challenge in September when it had to temporarily deactivate its frontend due to a breach involving its domain registrar account.
Conclusion
With the launch of UStb, Ethena Labs is diversifying its offerings, allowing users to choose between two distinct stablecoins—one backed by traditional financial assets and another utilizing synthetic methods. This move aims to provide more flexibility and security for investors as the stablecoin ecosystem continues to evolve.
