Ethena Launches UStb Stablecoin in Partnership with Securitize

Ethena 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 will invest its reserves in BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL), which is tokenized on Ethereum, according to a statement shared with The Block.

BlackRock’s BUIDL fund invests in U.S. dollars, short-term U.S. Treasury bills, and repurchase agreements. Launched in March this year, BUIDL has quickly grown to become the largest tokenized U.S. Treasuries fund, boasting over $522 million in assets under management.

Tokenized Government Securities: The tokenized government securities market now totals more than $2 billion, according to data from asset management firm 21.co, the parent company of bitcoin exchange-traded fund provider 21Shares.

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

Independent of USDe

UStb will serve as a “wholly independent product,” presenting an alternative and distinct risk profile compared to Ethena’s USDe stablecoin, according to the team.

USDe, described as a synthetic dollar, launched in February and has since become the fifth-largest stablecoin by market cap, with a current circulating supply of $2.6 billion.

USDe deviates from conventional stablecoins by utilizing derivative hedging strategies instead of direct fiat or asset backing. It uses eth, bitcoin, solana, and other crypto assets as collateral, paired with an arbitrage-based minting and redeeming system to maintain its U.S. dollar peg. Additionally, it generates yields through a cash-and-carry strategy.

However, USDe poses risks, such as exposure to derivatives markets, exchange counterparty risk, and collateral volatility, potentially impacting its peg stability during unfavorable market conditions.

The stablecoin experienced nearly $100 million in redemptions amid a crypto market selloff in August, briefly dipping to $0.997 before returning to its $1 target. Ethena Labs also temporarily deactivated its frontend due to a compromised domain registrar account last week.

UStb aims to assist USDe during challenging market conditions. “If deemed necessary by Ethena’s governance, during periods of negative funding rates, Ethena can close hedging positions underlying USDe and reallocate its backing assets to UStb to mitigate risks,” the team elaborated.

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 raising $14 million in a strategic funding round, achieving a valuation of $300 million, co-led by Dragonfly and Arthur Hayes' family office, Maelstrom.