Ethena Labs’ USDe stablecoin has rapidly surged to a $2 billion market cap within just two months of its release on Ethereum’s public mainnet. Since its launch in February, the market cap of the USDe stablecoin has experienced remarkable growth, increasing by over 147% in the last 30 days, according to DefiLlama. CoinGecko now ranks USDe as the fifth-largest token in the stablecoin market.
USDe distinguishes itself from traditional stablecoins by adopting a unique approach. Instead of holding cash reserves and equivalents to maintain its peg to fiat currencies like the U.S. dollar, USDe utilizes derivative hedging against collateral positions denominated in assets such as Bitcoin (BTC), Ethereum (ETH), ETH liquid staking tokens, and Tether (USDT).
With a $2 billion supply and market cap, Ethena’s synthetic dollar surpasses many established stablecoin options, trailing only behind USDT, Circle’s USD Coin (USDC), DAI, and First Digital USD (FDUSD).
However, some industry experts caution against potential risks associated with USDe’s model, drawing parallels to Terra’s algorithmic stablecoin, UST, which experienced a significant collapse in May 2022, resulting in a $60 billion loss. Notably, blockchain developer Andre Cronje and CryptoQuant Founder and CEO Ki Young Ju have raised concerns about whether USDe’s similarities to UST, particularly its backing assets like BTC, could lead to a similar outcome.
