Ethena, a stablecoin issuer focused on developing stablecoins that do not rely on traditional finance, has recently secured $14 million in funding. The investment was led by Dragonfly Capital and Malestrom, the family office of Arthur Hayes, with participation from investors such as Binance Labs, Deribit, Bybit, OKX, Gemini, Kraken, and traditional finance firm Franklin Templeton.
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USDe: A Stablecoin that does not rely on traditional finance
Stablecoins: A Blue Ocean Market with Few Competitors
Current mainstream stablecoins, USDC and USDT, primarily rely on reserves based on legal assets such as US government bonds to maintain their peg to fiat currencies. While most investors consider this method to be safer, it still depends on the traditional financial system to operate.
On the other hand, Ethena’s stablecoin, USDe, functions by hedging price risks with user collateral (ETH) and maintaining its peg to the US dollar through perpetual contract shorts. By using Delta hedging, it ensures that the returns or losses of any asset are offset against each other.
However, this does not mean that USDe is without risks. Liquidity and counterparty risks always exist during market pressures and unexpected events. To mitigate such risks, Ethena states that its collateral is held and settled by institutional-grade companies such as Fireblocks, Copper, and BitGo.
Guy Young, the founder of Ethena, stated:
In the cryptocurrency space, you are trying to create a parallel financial system, but the most important financial tool (stablecoins) in the entire field is completely tied to the existing system. And we are trying to create something that exists outside of the banking system.
According to their website, USDe currently has a market capitalization of $280 million with 3,450 users and an annualized return rate of 27.6%.
Y Combinator, the Silicon Valley accelerator, also mentioned stablecoins in its latest startup report, stating that the stablecoin field is a future trend and currently has very few competitors. They expect to see more stablecoin projects emerge and become mainstream in the future.
(Silicon Valley Accelerator Y Combinator: Stablecoins Have Unique Advantages and Still Represent Blue Ocean)
According to CoinGecko data, the total market capitalization of stablecoins is $139.9 billion, with 70% concentrated in the top-ranked USDT. The market capitalization of the top five stablecoins is as follows:
USDT: $97.7 billion
USDC: $28.1 billion
DAI: $5 billion
FDUSD: $2.8 billion
TUSD: $1.3 billion
Arthur Hayes
Dragonfly Capital
Ethena
USDe
Further Reading
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