Ethena Labs, the team behind the synthetic dollar-pegged product USDe, has announced the addition of Bitcoin (BTC) as collateral. The move aims to facilitate significant scaling beyond its current $2 billion supply. Ethena explained that with Bitcoin’s open interest surging from $10 billion to $25 million on major cryptocurrency exchanges in the past year, USDe has the potential to expand by a factor of 2.5.
Ethena believes that including Bitcoin as collateral will enhance liquidity and provide a safer and more robust product for USDe token holders. The team stated that BTC derivative markets are experiencing faster growth compared to ETH, offering better scalability and liquidity for delta hedging.
Before the addition of Bitcoin, USDe was backed by Ethereum (ETH), Tether (USDT), and Ether-based liquid staking tokens. Ethena sources the majority of its collateral from centralized exchanges like Binance, ByBit, and OKX. While Bitcoin does not offer a native staking yield like staked Ether, Ethena noted that staking yields of 3-4% are less significant during bull markets when funding rates can exceed 30%.
USDe currently ranks fifth in market capitalization among stablecoins, trailing behind USDT, USD Coin (USDC), Dai (DAI), and First Digital USD (FDUSD). However, some in the community, like renowned DeFi developer Andre Cronje, raised concerns about the sustainability of the Ethena Labs model.