Key Points
- Ethena Labs integrates Bitcoin as a backing asset for its USDe synthetic dollar.
- This move aims to scale the dollar-pegged token by over 2.5 times and increase product safety for traders.
Ethena Labs has incorporated Bitcoin as an underlying asset for its USDe synthetic dollar. This move comes as the popularity of the world’s first digital asset is on the rise.
Bitcoin to Support USDe Scaling
The decentralized finance (DeFi) protocol announced that using Bitcoin to back USDe will allow its dollar-linked token to scale more than 2.5 times. This will also enhance the safety of its products for traders. The decision aligns with the growth of Bitcoin derivative markets, which are surpassing their counterparts based on Ethereum.
As Ethena is moving towards a $10 billion scale, this offers a more secure backing and a safer product for users. The current supply of USDe is approximately worth $2 billion.
Bitcoin’s Superior Liquidity
Ethena also highlighted Bitcoin’s superior liquidity and duration profile for delta hedging compared to liquid staking tokens. This was a significant factor in the decision to include Bitcoin as a backing asset. Until this point, USDe has been solely backed by Ethereum liquid staking tokens. However, token holders are showing a growing interest in trading Bitcoin.
Over the past year, Bitcoin’s open interest has spiked by 150% to $25 billion. This has led to more than a doubling of USDe’s scaling capacity. In contrast, Ethereum’s open interest has only increased by 100% to $10 billion during the same period.
This strong demand for Bitcoin occurs as its speculative value is experiencing a spectacular increase. As of now, Bitcoin is trading at $68,384, an increase of 4% over the past 24 hours.
