Ethena Labs Launches USDtb, Backed by BlackRock’s BUIDL Fund

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As a seasoned analyst with over two decades of experience in the financial markets, I have witnessed the evolution of digital assets from their infancy to becoming a significant force in the global economy. The launch of USDtb by Ethena Labs is an exciting development that underscores the growing maturity and acceptance of stablecoins in the mainstream financial landscape.

On December 16th, the stablecoin USDtb, supported by BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL), was formally introduced and made available to the public by Ethena Labs.

In collaboration with Securitize, the USDtb was created to function similarly to established fiat-backed stablecoins like USDC and USDT. The reserves for this digital currency are held in cash or cash-equivalent assets, ensuring a consistent 1:1 value correlation.

USDtb Debuts

As per the blog post, 90% of the reserve asset for this stablecoin, known as BUIDL, supports the overall backing of USDtb. This makes USDtb the largest stablecoin backed by BUIDL so far. Importantly, USDtb functions independently from Ethena’s USDe, giving users an alternative stablecoin with a unique risk profile.

Furthermore, it’s anticipated that USDtb could enhance USDe’s stability during market turbulence by possibly functioning as a reserve asset when funding rates turn negative. This product has undergone thorough security evaluations from reputable firms like Code4rena, Quantstamp, Cyfrin, and Pashov. It’s being contemplated for integration in Spark’s $1 billion Tokenization Grand Prix competition.

Ethena has selected Copper, Zodia Custody, Komainu, and Coinbase Institutional to act as custodians for its recently introduced USDt stablecoin. The liquidity of the token will be maintained by significant providers such as Jump, Cumberland, Amber Group, GSR Markets, and SCB Limited.

USDtb’s Impact on Ethena’s Stablecoin Ecosystem

As a researcher, I’m sharing an intriguing prediction by José Maria Macedo, co-founder of Delphi Labs – a blockchain research and development firm. He anticipates that USDtb, upon its launch, could potentially become the largest on-chain tokenized treasury product in just a month. This projection carries great importance for Ethena, as Macedo emphasizes. For one, USDtb offers a more secure, lower-risk yield-bearing stablecoin alternative. Furthermore, it bolsters Ethena’s existing USDe stablecoin by providing a complementary financial product within the same ecosystem.

In simpler terms, the executive mentioned that under circumstances where funding rates drop below treasury rates, Ethena has the ability to liquidate hedging positions and redirect assets towards US dollar time deposits (USDtb). This strategy lessens USDe’s vulnerability to issues related to negative funding rates and maintains a minimum yield for USDe that aligns with the treasury rate.

In the meantime, Seraphim Czecker, who oversees growth at Ethena, discussed how USDtb affects their operations, especially during challenging market situations. He clarified that long durations of unfavorable funding rates are no longer a concern for Ethena, because the platform can now invest capital into its own stablecoin, USDtb, which is backed by real-world assets.

This method sets a minimum return level (“floor”) based on the T-Bill rate, providing a steady Annual Percentage Yield (APY) even during challenging market conditions. Moreover, Czecker emphasized the potential scalability of USDtb, suggesting it could surpass $100 billion in total value locked (TVL).

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2024-12-18 06:04