Ethena Labs, the entity behind the synthetic stablecoin USDe, has put forward a proposal to include Solana (SOL) as part of its collateral mix. This move would diversify USDe’s collateral base and potentially enhance its stability.
Unlike traditional stablecoins like Tether (USDT) and USDC, which are backed by fiat assets at a 1:1 ratio, USDe is a synthetic stablecoin. It maintains its $1 peg by collateralizing other stablecoins and leveraging a hedged cash-and-carry trade. This strategy involves taking futures positions with significant open interest to stabilize value, while a reserve fund helps manage risks in volatile market conditions.
SOL as a New Collateral Asset
If approved by Ethena’s Risk Committee, SOL would join Bitcoin (BTC) and Ethereum (ETH) as a collateral asset for USDe. The initial allocation target for SOL is between $100 million and $200 million, representing roughly 5-10% of its global open interest.
Leveraging Liquid Staking Tokens (LSTs)
Ethena also plans to explore using liquid staking tokens (LSTs) like BNSOL and bbSOL as collateral. This approach is similar to how the company currently utilizes ETH LSTs, which make up one-third of its ETH allocation.
Expanding Investment Horizons
In addition to the proposal for SOL, Ethena recently announced that it has allocated $46 million of its reserve fund to tokenized real-world asset investments. This move aligns with the broader trend in DeFi towards yield generation from asset-backed tokens.
Also Read: Ethena Picks 4 Key Assets For RWA Reserve – $46.6M Allocated, ENA Stays Steady At $0.27!
The inclusion of SOL as a collateral asset for USDe would be a significant development for both Ethena and the Solana ecosystem. It could enhance the stability and diversification of USDe, while also providing additional opportunities for SOL holders to participate in the DeFi space.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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