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 change 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 charge Nonetheless it has change into evident that DeFi is insufficiently sized in the meanwhile to shut the arb fully 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 development mirrors the momentum seen earlier this 12 months when USDe’s market cap hit the $3 billion mark simply 4 months after its public launch in February.
What’s driving USDe’s development
Market observers identified that USDe’s surge displays sturdy dynamics fueled by bullish sentiment and demand for different yield-bearing belongings.
In contrast to USDT and USDC, that are broadly used for transactions, the vast majority of USDe tokens are held to earn rewards. This implies that customers primarily view USDe as a yield-generating asset moderately than a medium of alternate.
Certainly, USDe affords significantly engaging yields generated via Ethereum staking rewards hedged in opposition to quick funding charges for ETH. In keeping with Ethena’s web site, sUSDe holders can earn an annual share yield (APY) of 29%.
Notably, some critics have drawn parallels between Ethena’s mannequin and the ill-fated Terra-Luna challenge. In Might 2022, Terra’s algorithmic stablecoin collapsed after its aggressive development 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 most important DeFi lending protocol within the crypto ecosystem, boasting a complete worth locked (TVL) of round $30 billion.
