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Ethena Labs Unveils New Stablecoin UStb Backed by BlackRock BUIDL Fund
In its latest announcement, Ethena Labs has said that it would launch a new UStb stablecoin in partnership with Securitize, the real-world asset tokenization platform.
Similar to other traditional stablecoins, UStb will function in the same way and will invest its reserves into BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL), tokenized on the Ethereum blockchain network.
As we know, the BlackRock BUIDL Fund invests in USD, short-term US Treasury bills, and other repurchase agreements. Since its launch last March, BUIDL has become the largest tokenized U.S. Treasuries fund. It now manages more than $522 million worth of assets.
On the other hand, Securitize facilitates more than $950 million in tokenized investments. this includes the tokenized funds for Hamilton Lane, BlackRock, and KKR across asset classes.
Ethena Labs has confirmed that the newly launched UStb stablecoin is a “wholly independent product”, and independent of its already existing USDe USDe $1.00 24h volatility: -0.1% Market cap: $2.55 B Vol. 24h: $41.60 M stablecoin. Thus, it has a completely different risk profile in comparison to USDe.
We are excited to announce Ethena's newest product offering: UStb
UStb will be fully backed by @Blackrock BUIDL in partnership with @Securitize, enabling a separate fiat stablecoin product alongside USDe
Details below on why this is important: pic.twitter.com/jOIoMef7W3
— Ethena Labs (@ethena_labs) September 26, 2024
Known as the synthetic Dollar, Ethena launched the USDe stablecoin earlier this year in February. With a current circulating supply of more than $2.6 billion, it’s the fifth-largest stablecoin currently in the market.
The Synergy Between Ethena Labs Stablecoins – UStb and USDe
In comparison to traditional stablecoins, the USDe stablecoin differs by using derivative hedging strategies instead of using asset backing or direct fiat. It largely relies on Bitcoin BTC $64 790 24h volatility: 1.5% Market cap: $1.28 T Vol. 24h: $31.50 B , Ethereum ETH $2 630 24h volatility: 0.3% Market cap: $316.78 B Vol. 24h: $15.94 B , Solana SOL $154.4 24h volatility: 2.0% Market cap: $72.61 B Vol. 24h: $3.04 B , and other crypto assets as collateral. Furthermore, in order to maintain its USD peg, it also employs an arbitrage-based minting and redeeming system. Also, the USDe stablecoin generates yields via a cash-and-carry strategy.
However, USDe carries risks such as exposure to derivatives markets, counterparty risk from exchanges, and collateral volatility, all of which could impact its peg stability in volatile market conditions. Amid the crypto market sell-off, the USDe stablecoin faced a massive $100 million in redemptions, which led to its peg dropping a bit to $0.997, however, later regained to $1.
The launch of the new UStb stablecoin can help USDe in difficult market conditions. The Ethena Labs team explained: “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 re-allocate its backing assets to UStb to further ameliorate related risks”.
Ethena plans for UStb to serve as an alternative to USDe for margin collateral on its partnered centralized exchanges, including Bybit and Bitget.
Ethena Labs Unveils New Stablecoin UStb Backed by BlackRock BUIDL Fund
