Ethena Considers Solana as New Reserve Asset for USDe Stablecoin

TLDR

• Ethena community proposes adding Solana and liquid staked SOL variants as reserve assets for USDe
• Solana backing aims to serve as a hedging mechanism similar to BTC and ETH perpetual futures
• Including Solana could unlock $2-3 billion in additional open interest for USDe
• ENA price surged 17% to $0.39, pushing market cap above $1 billion
• Proposal aims to diversify USDe’s asset pool and enhance its DeFi utility

The Ethena community has put forward a proposal to include Solana (SOL) and its liquid staked variants as reserve assets for backing their synthetic dollar, USDe.

This move comes as part of Ethena’s efforts to diversify its asset pool and expand the utility of USDe in the decentralized finance (DeFi) space.

The proposal suggests adding not only SOL but also Binance Liquid Staked SOL (BNSOL) and Bybit Liquid Staked SOL (bbSOL) as eligible backing assets for USDe.

This expansion aims to create a more robust and diverse foundation for the stablecoin, potentially enhancing its stability and scalability.

According to the proposal, the Solana backing mechanism would function similarly to the hedging strategy Ethena currently employs for Bitcoin (BTC) and Ethereum (ETH) perpetual futures.

This approach could provide additional stability to USDe while also opening up new opportunities for growth.

The Ethena Foundation stated that the proposed allocation would be implemented gradually, in consultation with their Risk Committee.

This cautious approach takes into account factors such as the shorter trading history of SOL perpetual futures, lower liquidity, and limited historical funding rate data compared to more established cryptocurrencies.

One of the key benefits highlighted in the proposal is the potential to unlock $2-3 billion in additional open interest.

This increased capacity could allow Ethena to scale USDe beyond its current supply of $2.5 billion, meeting growing market demand for the synthetic dollar.

The news of this proposal has had a significant impact on the price of Ethena’s native token, ENA. Following the announcement, ENA’s price surged by 17%, reaching $0.39 and pushing its market capitalization above $1 billion.

This price movement reflects growing investor interest in Ethena’s ecosystem and the potential impact of the Solana backing proposal.

USDe, Ethena’s synthetic dollar, has gained considerable traction since its launch, quickly reaching a market capitalization of $2.5 billion.

The stablecoin is designed to be a scalable, censorship-resistant, and stable crypto-native solution, maintaining its peg through delta hedging of derivatives positions.

Ethena’s recent expansion efforts have not been limited to the Solana proposal. In August, the project launched USDe on the Solana blockchain using Layerzero’s OFT standard, further extending the stablecoin’s reach across different blockchain ecosystems.

Ethena recently partnered with BlackRock and Securitize to launch UStb, another stablecoin offering.

These moves collectively strengthen Ethena’s market presence and position USDe as a strong competitor in the stablecoin space, potentially challenging established players like Tether.

The technical analysis of ENA’s price chart suggests potential for further growth. If the current bullish trend continues, analysts point to immediate price targets of $0.5080 and $0.69. Should ENA successfully breach these levels, it could potentially reach its all-time high of $1.5.