Ethena Labs has revealed its intentions to expand the USDe stablecoin’s supporting assets to include Bitcoin.
Adding Bitcoin as a supporting asset would enhance USDe’s existing stability of $2 billion, according to Ethena’s newest social media postings. The goal of this upgrade is to improve the stablecoin’s current architecture by taking advantage of Bitcoin’s liquidity.
According to the release, Ethena’s hedges currently make up almost 20% of Ethereum’s open interest, thanks to USDe’s substantial growth since its start.
“The ability for USDe to grow has expanded >2.5x,” said Ethena Labs, adding that there is $25 billion worth of Bitcoin open interest that Ethena may use to delta hedge.
While Ethereum’s open interest (OI) has increased from $5 to $10 billion in only one year, Bitcoin’s OI on major exchanges (excluding CME) has increased from $10 billion to $25 billion, according to Ethena Labs.
Aside from improved scalability and liquidity for delta hedging, the release went into detail about how the derivative markets for Bitcoin are growing faster than Ethereum’s.
The article states that once Ethene approaches $10 billion in funding, it will provide a more stable foundation, which will make the product safer for customers.
Bitcoin “does not possess a natural staking return like staked ETH, staking yields of 3-4% are less relevant in a bull market where financing rates are >30%,” the business said in response to concerns about the possible drawbacks of backing USDe with Bitcoin.
So, there’s no better time than now to optimize for USDe’s scalability, says Ethena Labs. Recently, MakerDAO suggested that Morpho Labs invest $600 million in DAI into USDe and its staked form, sUSDe. By taking advantage of Morpho Labs’ financing capabilities, MakerDAO hopes to diversify its investment portfolio.
According to MonetSupply from Block Analitica, the decision shows that users prefer USDe over sUSDe as a liquidity risk reducer and as an addition to Ethena’s insurance fund. This choice is based on their preferences for certain DeFi products and leverage.
The proposal calls for an initial investment maximum of $600 million, with an increase to $1 billion being considered.
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