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Ethena Labs Proposes SOL for USDe’s Collateral

Oct 13, 2024
    Ethena Labs has proposed to the USDe community that SOL be added to its mix of collateral.USDe is unique insofar that it maintains $1 peg with collateral, hedged trades, and risk-managed reserves.
As an experienced analyst with a keen eye for market trends and a knack for discerning potential, I find Ethena Labs’ proposal to add Solana (SOL) as collateral for USDe intriguing. My initial thoughts are positive, given my previous observations of SOL’s robust growth and expanding ecosystem.Ethena Labs, the organization behind the creation and management of USDe, has suggested incorporating Solana (SOL) into the diverse set of assets making up the treasury for their synthetic stablecoin.

USDm stands apart from traditional stablecoins like Tether’s (USDT) or Circle’s (USDC) because it functions as a synthetic stablecoin rather than being backed by real money at a 1-to-1 ratio. Instead, it maintains its $1 value through collateralizing other stablecoins and employing a hedged cash-and-carry strategy. This method involves taking futures positions with substantial open interest to help stabilize the value, all while being backed by a reserve fund that helps manage risks in unpredictable market situations.

If Ethena’s Risk Committee, separate from Ethena Labs, endorses the plan, USDe will start incorporating Solana (SOL) as a collateral asset. Initially, SOL positions worth between $100 million to $200 million are planned. This initial investment equates to approximately 5-10% of SOL’s current market value, mirroring its existing 3% share in Bitcoin‘s (BTC) total open interest and 9% in Ethereum (ETH).
The proposal also considers using liquid staking tokens (LSTs) like BNSOL and bbSOL, similar to how Ethena utilizes ETH LSTs, which currently represent one-third of its ETH allocation.

Lately, Ethena revealed that they set aside $46 million from their reserve fund to invest in tokenized real-world assets within BlackRock’s BUIDL, Mountain’s USDM, Superstate’s USTB, and Sky’s USDS. This move mirrors the growing trend in DeFi, focusing on generating returns through tokens backed by tangible assets.

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2024-10-14 08:04