ETH-backed USDe stablecoin goes live on public mainnet, ensuring liquidity through hedging
Ethena recently caused a stir on social media by announcing the launch of the USDe stablecoin on the public mainnet, along with an innovative Shard Campaign aimed at boosting user engagement in its ecosystem.
In a departure from traditional incentive models, the company aims to cultivate a vibrant community by rewarding contributions. The Shard Campaign, designed to foster long-term involvement, is divided into short-duration seasons called “Epochs.”
Each Epoch focuses on different activities related to the USDe stablecoin and community integration. The campaign will run for three months or until the USDe supply reaches $1 billion. Users will be rewarded for various contributions, such as providing liquidity in USDe Curve pools and minting with different stablecoins, with the goal of improving liquidity and promoting ecosystem growth.
A key feature of the Shard Campaign is its decay mechanism, which gradually reduces the number of Shards awarded over time. This incentivizes early participation for greater rewards and targets users committed to contributing to Ethena’s long-term success. However, certain jurisdictions, including the US, have restrictions on participation.
Ethena has also emphasized its commitment to compliance with regulations. It ensures that its synthetic dollar, USDe, and its staked version, sUSDe, operate within legal frameworks. The company has stated that USDe is backed by staked ETH and short ETH hedges, serving as a crucial liquidity source for Automated Market Makers (AMMs) and order books in Centralized Exchanges (CEXs). On the other hand, sUSDe allows for value accrual by benefiting from the underlying staking and hedging activities associated with USDe.
The launch of USDe follows a successful funding round in which Ethena secured $14 million from investors such as Dragonfly, Bybit, OKX, Deribit, and Gemini. This funding supplements a previous $6 million investment round that included contributions from industry giants like Binance. The capital injection will support the development of decentralized finance solutions on the Ethereum platform, with a focus on USDe.
Unlike traditional stablecoins, USDe utilizes delta-hedging strategies to maintain its peg to the U.S. dollar. Since its launch in December, it has already locked in over $289 million in value. This unique approach to value stability in the digital currency market sets USDe apart from its competitors.
Ethena’s entry into the stablecoin market, particularly with a focus on synthetic dollars, positions the company strongly within the $130 billion stablecoin sector. Issuing stablecoins has historically been a lucrative venture, as issuers benefit from the interest earned on reserve assets without the obligation to pass these earnings on to the holders. Tether, the largest issuer in the market, reported a profit of $2.85 billion in the fourth quarter, highlighting the profitability of stablecoin economics.
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