Ethena Dominates Stablecoin Market with $2 Billion Surge: Could USDT & USDC Face Threats?
New Stablecoin USDe Surpasses $2 Billion Market Cap, Offers Unique Strategy for Stability
In a surprising turn of events, a newcomer in the stablecoin market has quickly gained momentum and reached a market cap of $2 billion. USDe, unlike its competitors such as USDT and USDC, stands out due to its innovative approach to stability. Instead of being backed by physical US dollars, USDe relies on cryptocurrencies like ETH and BTC.
Under the guidance of Julio Moreno, the Head of Research at CryptoQuant, USDe has implemented a distinctive strategy that has garnered attention and speculation about its potential impact on the stablecoin market.
USDe’s rapid rise to a $2 billion market cap has caught the interest of investors and industry experts alike. Unlike other stablecoins that are tied to fiat reserves or rely on cryptocurrency over-collateralization, USDe maintains a solid 1:1 peg to the US dollar through a method called “delta hedging staked Ethereum collateral.” This unique approach shields USDe from the volatility of its underlying assets, ensuring stability even in unpredictable market conditions.
Ethena Labs founder, in their analysis, highlights USDe as the fastest-growing stablecoin since its launch. One significant factor contributing to USDe’s success is its ability to generate returns for holders, a feature that is notably absent in leading stablecoins like USDT and USDC. USDe achieves this by utilizing funding payments from short positions on exchanges and ETH staking rewards, setting it apart from its competitors.
Julio Moreno, the Head of Research at CryptoQuant, emphasizes two critical factors that USDe investors should consider: the size of the reserve fund relative to the market cap and the keep rate, which reinvests the generated yield. As USDe’s market cap expands, funding payments from short positions also increase. Moreno suggests maintaining a keep rate above 20% to ensure stability and avoid the fate of other stablecoins like Terra’s UST. For instance, with market caps of $5 billion, $7.5 billion, or $10 billion, the reserve fund should ideally be around $40 million, $60 million, and $80 million, respectively.
USDe is actively adapting to market changes to secure its long-term stability. By closely monitoring key metrics and actively managing risks, USDe aims to establish itself as a reliable option for investors.
In conclusion, USDe’s unique strategy and rapid growth in the stablecoin market are generating excitement and raising expectations. As experts closely observe USDe’s reserve fund and keep rate, the stability of this newcomer will be put to the test in the long run.