Ethena Labs, the team behind USDe, has introduced Bitcoin (BTC) as collateral to its synthetic dollar-pegged product, with the goal of significantly scaling beyond its $2 billion supply.
Bitcoin’s inclusion coincides with a jump in Bitcoin open interest on major cryptocurrencycurrency exchanges from $10 billion to $25 million, allowing USDe to scale by 2.5 times, according to Ethena’s announcement on X.
USDe was introduced on Ethereum on February 19, with an initial annual percentage yield (APY) of 27.6%, raising worries. However, its APY has now stabilized at 7.15%, having peaked at 113% on March 5.
Ethena believes that introducing Bitcoin will increase liquidity and create a more secure and resilient product for USDe holders. To maintain the USDe peg, they use a delta hedging method based on the Bitcoin futures market.
Prior to this update, USDe was backed by Ether (ETH), Tether (USDT), and Ether-based liquid staking tokens. Ethena gets majority of its collateral from platforms like Binance, ByBit, and OKX.
Although Bitcoin lacks native staking incentives like Ether, Ethena contends that staking payouts are less important in bull markets. They hope to distinguish USDe from stablecoins by eliminating dependency on traditional banking.
