Ethena’s artificial USDe greenback has emerged because the fastest-growing USD-pegged stablecoin over the previous 30 days after its market capitalization skyrocketed 73% to an all-time excessive of $4.77 billion.
The surge has propelled USDe to turn into the third-largest stablecoin, surpassing DAI’s $4.7 billion market cap. Nonetheless, USDe nonetheless lags behind Tether’s USDT at $135 billion and Circle’s USDC at $40 billion.
Ethena Labs co-founder and CEO Man Younger mentioned:
“We’re starting to now see the results as USDe blackholes each stablecoin in DeFi whereas warping lending markets to a brand new base price Nonetheless it has turn into evident that DeFi is insufficiently sized in the intervening time to shut the arb totally and bigger swimming pools of capital are required The subsequent step for Ethena is plugging on to $100b-1tn+ asset managers who can present the capital required.”
In the meantime, the speedy progress mirrors the momentum seen earlier this yr when USDe’s market cap hit the $3 billion mark simply 4 months after its public launch in February.
What’s driving USDe’s progress
Market observers identified that USDe’s surge displays sturdy dynamics fueled by bullish sentiment and demand for different yield-bearing property.
Not like USDT and USDC, that are extensively used for transactions, nearly all of USDe tokens are held to earn rewards. This means that customers primarily view USDe as a yield-generating asset moderately than a medium of alternate.
Certainly, USDe gives notably engaging yields generated via Ethereum staking rewards hedged towards quick funding charges for ETH. In keeping with Ethena’s web site, sUSDe holders can earn an annual proportion yield (APY) of 29%.
Notably, some critics have drawn parallels between Ethena’s mannequin and the ill-fated Terra-Luna challenge. In Could 2022, Terra’s algorithmic stablecoin collapsed after its aggressive progress technique grew to become unsustainable, resulting in a major downturn within the cryptocurrency market.
Nonetheless, demand stays excessive, evidenced by the truth that its provide and borrow APR charges considerably outpace these of USDT and USDC on Aave.
Aave is the biggest DeFi lending protocol within the crypto ecosystem, boasting a complete worth locked (TVL) of round $30 billion.
