Ethena ENA Announces Launch of UStb Stablecoin

Ethena ENA (+10.47%) is set to launch a new stablecoin, UStb, in collaboration with the real-world asset tokenization platform Securitize.

UStb is designed to function like traditional stablecoins and intends to invest its reserves in BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL), which is tokenized on Ethereum, as per a statement shared with The Block.

BlackRock’s BUIDL fund invests in U.S. dollars, short-term U.S. Treasury bills, and repurchase agreements. Since its launch in March, BUIDL has swiftly grown to become the largest tokenized U.S. Treasuries fund, with over $522 million in assets under management.

The tokenized government securities market now totals over $2 billion, according to data compiled by 21.co, the parent company of bitcoin exchange-traded fund provider 21Shares.

Securitize has facilitated over $950 million in tokenized investments, including tokenizing funds for BlackRock, Hamilton Lane, and KKR across various asset classes.

Independent of USDe

UStb will be a “wholly independent product,” offering an alternative and different risk profile compared to Ethena’s existing stablecoin, USDe. USDe, launched in February, has emerged as the fifth-largest stablecoin by market cap, with a current circulating supply of $2.6 billion.

USDe differs from traditional stablecoins by employing derivative hedging strategies instead of direct fiat or asset backing. It uses ether, bitcoin, solana, and other crypto assets as collateral, coupled with an arbitrage-based minting and redeeming system to maintain its U.S. dollar peg, generating yields via a cash-and-carry strategy.

However, USDe comes with risks, such as exposure to derivatives markets, counterparty risk, and collateral volatility, which could affect its peg stability in adverse market conditions. The stablecoin faced nearly $100 million in redemptions during a crypto market selloff in August, temporarily dipping to $0.997 before returning to its $1 target. Ethena Labs also temporarily deactivated its frontend following a compromise of its domain registrar account last week.

UStb can assist USDe in navigating difficult market conditions. “If deemed necessary and appropriate by Ethena’s governance, during periods of negative funding rates, Ethena will be able to close the hedging positions underlying USDe and reallocate its backing assets to UStb to mitigate related risks,” the team detailed.

Ethena also plans for UStb to serve as an alternative to USDe as margin collateral on partnered centralized exchanges, including Bybit and Bitget.

In February, Ethena Labs announced it raised $14 million in a strategic funding round at a $300 million valuation, co-led by Dragonfly and Arthur Hayes’ family office, Maelstrom.