Ethena’s synthetic stablecoin, USDe, has proven resilient despite recent market volatility triggered by threats of a trade war from the White House. Unlike traditional stablecoins such as Circle’s USDC, USDe isn’t backed by fiat assets at a 1:1 ratio. Instead, it maintains its $1 peg by collateralizing stablecoins and utilizing a hedged cash-and-carry strategy, involving futures positions with large open interest to stabilize its value.
Throughout Monday’s trading, USDe successfully held its $1 peg, with only brief fluctuations to $0.999. According to data from CoinGecko, the stablecoin’s market cap rose to over $6 billion, up from around $5.7 billion just a week ago. This growth demonstrates USDe’s ability to maintain stability even in turbulent times.
Crucial to maintaining its peg, USDe’s funding rate remained positive. On-chain data suggests that the positive funding rate is contributing to a slightly bullish market sentiment, with long position holders paying a small fee to short position holders. This indicates a market equilibrium, further supporting USDe’s peg to the dollar.
Another reason behind USDe’s stability is its interest-bearing nature, offering an attractive APY of 10%, which has remained steady over the last 30 days, according to Dune Analytics. This yield-bearing feature has garnered interest from investors looking for stability amidst market uncertainty.
While concerns about the sustainability of Ethena’s reserve fund were raised last year, the fund has grown in proportion to USDe’s market cap, reaching $46.6 million by the end of Q4 2024. This reassures investors about the token’s long-term viability.
Given USDe’s consistent stability and yield offerings, it has become an attractive option for investors looking for a safe haven in the crypto market. Notably, Arthur Hayes, co-founder of BitMEX and CIO of digital asset fund Maelstrom, has significantly increased his exposure to USDe, indicating strong confidence in its future.
As the market faces uncertainty, USDe’s resilience positions it as a reliable asset for investors seeking stability and returns.
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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