Ethena and Sky Thrive Post-GENIUS Act with Protocol Staking

Since the July passage of the ‘GENIUS Stablecoin Act,’ Ethena’s USDe and Sky’s USDS have seen significant supply growth due to protocol-based staking alternatives.

The act’s prohibition on direct issuer yields has intensified demand for yield-bearing stablecoins, altering the competitive landscape and prompting financial responses from market participants.

Enhanced Resilience and Market Recovery in Stablecoins

The GENIUS Act’s prohibition on issuer-provided yield has propelled protocol-based staking as a compliant solution. Ethena’s USDe increased by 70% to $9.49 billion, and Sky’s USDS by 23% to $4.81 billion. Ethena CEO Guy Young emphasized “USDe’s demand” as proof of successful compliance.

Effective switch to on-chain staking mechanisms has allowed investors to continue earning yields, defying traditional limitations post-legislation. Ethena’s partnership with Anchorage Digital, a regulated custodian, supported this growth. Market analysts such as Anthony Yim and Julio Moreno recognize yield-bearing stablecoins as a leading choice, reshaping post-GENIUS capital allocation models. Investors prioritize innovative, compliant strategies in dynamic regulatory environments.

“USDe’s growth is proof that compliant, yield-enabled stablecoins are in demand—our delta-neutral staking model allows users to participate in yield without issuer risk.” — Guy Young, Founder & CEO, Ethena Labs Ethena Twitter

Additional Information

Did you know? In response to historic yield bans, stablecoin issuers now leverage extensive on-chain mechanisms, mirroring the DeFi evolution post-2021 SEC actions.

Ethena USDe, currently valued at $1.00, boasts a market cap of $9.51 billion, docking third in stablecoin rankings. Its trading volume hit $325.43 million, reflecting a 22.90% decline. Despite minor dips, market recovery is seen with a 4.77% increase over the past 30 days, based on CoinMarketCap data.

Insights from Coincu research suggest that protocol-based yield mechanisms could lead to a more resilient financial ecosystem. Enhanced flexibility and regulatory clarity support the trend toward decentralized finance innovations.