Ethena USDe (USDE)

Data Delay

Price data is delayed

Trading and Speculation

Ethena USDe is used by traders to hedge against market volatility by converting assets into a stable token during uncertain times.

Liquidity Management and Staking

Users can mint or redeem Ethena USDe for managing liquidity and stake it to earn rewards.

Medium of Exchange in DeFi

It functions as a stable currency for decentralized finance activities like lending, trading, and payments.

Derivatives and Margin Collateral

Ethena USDe can be used as margin collateral on platforms like Deribit, enabling new structured product use cases and earning rewards.

Synthetic Dollar Backing

Unlike traditional stablecoins backed by fiat, Ethena USDe is backed by Ethereum derivatives and uses delta-hedging to maintain its peg to the US dollar.

Innovative Financial Strategies

It supports "cash and carry" trades by using spot assets as collateral to open short positions with perpetual futures contracts.

Integration with Insurance and Reinsurance

Ethena USDe can be locked as reserve assets to support global insurers through partnerships like the Resilience Foundation.

Pros

• Innovative Synthetic Dollar: Ethena USDe uses crypto assets and derivatives like futures contracts to maintain its peg, offering a new approach compared to traditional fiat-backed stablecoins.
• High Yield Potential: It generates attractive yields (around 20% APY) through a cash-and-carry trade strategy involving shorting perpetual futures and holding spot assets.
• Scalability and Decentralization: Built on Ethereum, it aims to be censorship-resistant and scalable within the DeFi ecosystem.
• Market Adoption: Quickly reached a $3 billion market cap and ranks among the top stablecoins by supply.
• Integration: Compatible with lending protocols like Aave and Morpho, allowing users to borrow against sUSDe and amplify yields.

Cons

• Complex Mechanism: The synthetic dollar relies on delta hedging and derivatives, which can be harder to understand than traditional stablecoins.
• Market Sensitivity: Its stability depends on crypto market conditions and funding rates, which can affect yields and peg stability during downturns.
• Execution Risks: Although no losses have been reported, slippage or trading errors could impact funds.
• Backing Assets: Uses crypto collateral like USDC, DAI, and Bitcoin futures, which introduces different risks compared to fiat-backed stablecoins.
• Regulatory Uncertainty: Synthetic stablecoins face unclear regulatory environments that could affect long-term sustainability.

Ethena USDe offers a fresh, yield-generating stablecoin model with strong growth but involves more complex financial strategies and market dependencies than traditional stablecoins.

Founders

Ethena USDe was founded by Guy Young, who is also the CEO of Ethena Labs. He has a strong background in traditional finance and leads the development of this fully-backed on-chain stablecoin.

Investors in Ethena USDe

Ethena Labs, the developer of Ethena USDe, has raised funding from several investors. Key investors include:

• Arthur Hayes, co-founder of BitMEX, participated in early funding rounds.
• Franklin Templeton has invested in Ethena, including a $100 million raise to support new token development.
• Other investors have joined strategic funding rounds, contributing to a valuation of around $300 million.

Some previously reported investors like PayPal Ventures, Brevan Howard, Fidelity, Binance, Deribit, Gemini, and Kraken were later clarified as not part of the latest funding round.

Ethena's funding supports the growth and launch of its decentralized stablecoin, USDe, which uses innovative financial strategies to maintain its value.

Halal Status of Ethena USDe

Ethena USDe is generally considered halal because it is a stablecoin designed to maintain a fixed value and does not involve interest (riba) or gambling (maysir), which are prohibited in Islamic finance. However, final rulings can vary depending on individual scholars and specific use cases.