Key Insights
- Ethena Labs has introduced UStb, a stablecoin fully supported by BlackRock’s BUIDL fund.
- The ENA governance token experienced a 14% rise following the announcement of UStb.
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Ethena Labs, the company behind the synthetic USDe dollar, has unveiled a new stablecoin called UStb that will be fully backed by BlackRock’s on-chain BUIDL fund. This initiative broadens Ethena’s stablecoin portfolio and aims to offer more stability options for users and exchange partners.
https://x.com/ethena_labs/status/1839259051030630757
UStb will operate similarly to conventional stablecoins, with its reserves invested in BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL). The BUIDL fund holds US dollars, US Treasury bills, and repurchase agreements, ensuring a stable foundation for the new stablecoin.
UStb as a complement to USDe
According to Ethena, UStb will serve as an independent product with a distinct risk profile compared to USDe. While USDe is a synthetic stablecoin maintaining a $1 peg via cash-and-carry arbitrage, UStb aims to provide a more traditional stablecoin framework backed by tangible assets.
The company emphasized that UStb could aid USDe during turbulent market situations. Ethena’s governance structure facilitates reallocating backing assets between USDe and UStb as necessary, potentially reducing risks linked to negative funding rates.
“UStb can also help USDe navigate challenging market conditions,” Ethena Labs stated in a press release. “During periods of negative funding, the company can liquidate hedging positions related to USDe and transfer its reserve assets to UStb.”
Exchange integrations and market effects
Ethena intends to list UStb on centralized exchanges like Bybit and Bitget, where USDe is already utilized as margin collateral. The introduction of UStb will offer exchange partners a choice between two distinct products for margin collateral, potentially enhancing the adoption of Ethena’s stablecoin solutions.
Following the announcement, Ethena Labs’ ENA governance token saw a significant price increase. In just 24 hours, ENA’s price rose approximately 14%, moving from $0.307 to $0.378. Trading volume also saw a substantial increase, reaching about $196.1 million.
However, the market capitalization of USDe, Ethena’s flagship token, experienced a slight contraction of $13 million to $2.54 billion on the announcement day. This decline occurred after USDe had surpassed a $3 billion market cap in June.
The rollout of UStb represents Ethena’s ongoing commitment to innovate within the decentralized finance (DeFi) arena. The company aspires to create a crypto-native yield-bearing stablecoin ecosystem on Ethereum that is independent of traditional banking frameworks.
Ethena’s strategy incorporates delta-neutral tactics, on-chain custody, and derivatives to manage volatility and enhance scalability and stability. The addition of UStb to its offerings illustrates the company’s dedication to delivering a range of stablecoin options for users and exchange partners across diverse market conditions.
Earlier this month, Ethena experienced a frontend attack but confirmed that no funds were compromised, and the impact was limited to its user interface.
