A New Player in Stablecoin Market
Ethena Labs has announced that it is about to launch a new fiat stablecoin called UStb. This company is usually into the Ethereum-based synthetic dollar protocol. This new token will be fully collateralized by BlackRock’s USD Institutional Digital Liquidity Fund BUILD and will be developed in association with Securitize Markets LLC. All through this development process, it would serve as an alternative to Ethena’s already existing USDe stablecoin and introduce another available option to its users and exchanges.
BlackRock’s Tokenized Fund: BUILD
BlackRock’s BUILD, launched in March 2024, represents the firm’s maiden tokenized fund to go live on the public blockchain Ethereum. The BUILD allows investors to generate yield in U.S. dollars and is managed through Securitize Markets LLC-the experts in the field of real-world asset tokenization. Having invested in U.S. Treasury bills, notes, and other obligations, BUILD has quickly established itself as one of the largest tokenized funds ever created based on U.S. Treasuries, managing over $522 million in assets.
Differentiated Risk Profile and Stability
UStb will be fully collateralized by BlackRock’s BUILD and Securitize to ensure stability and reliability. It will function much like any other traditional stablecoin, offering users and exchange partners an asset with which they are very familiar and that is non-threatening. This contrasts with USDe, which depends on a hedging strategy based on derivatives. UStb will represent a differentiated risk profile that should be appealing to users seeking stability and low-risk exposure.
Ethena Labs has recently responded to concerns about USDe’s poor performance in negative funding environments, saying that USDe has not had one week of negative funding in the past six months despite poor market conditions.
Expansion of Partnerships and Integration to Exchanges
Ethena Labs is going to extend the integrations with CEXs from the already existing ones with Bybit and Bitget. The introduction of UStb will mean that exchange partners will have two different stablecoin products for margin collateral: USDe and UStb. More information on the launch timeline of the UStb and new integrations will be provided in the days to come.
USDe: A Synthetic Stablecoin with Unique Risks
USDe went live in February 2024, quickly became popular, and is now the fifth-biggest stablecoin by market capitalization, with its current supply at $2.54 billion. Unlike traditional stablecoins pegged directly to fiat or asset-backed, USDe derives its security from Bitcoin (BTC), Ether (ETH), Solana (SOL), and other crypto assets as collateral. It maintains its peg to the U.S. dollar via an arbitrage-driven system and generates yield through a cash-and-carry strategy.
Nevertheless, USDe’s unique model also puts it at risk with regards to derivatives market exposure, exchange counterparty risk, and collateral volatility. On Aug. 5, during a crypto market selloff, USDe saw nearly $100 million in redemptions and briefly dipped to $0.997 before recovering back to its $1 peg.
Security Concerns and Future Developments
Ethena Labs recently experienced a security incident that forced it to temporarily shut down its frontend after the breach of its domain registrar account on Sept. 18. Development on UStb and planning on expansion goes on despite such incidents. Ethena Labs remains committed to safe and innovative stablecoin solutions for its users.
These diversified offerings in the forms of USDe and UStb represent unique choices for both users and exchanges in an evolving stablecoin market, each with different risk appetites and with different market conditions.
