2024-04-07
Ethena Labs' synthetic dollar has experienced an impressive surge in value, reaching a market cap of $2 billion in less than two months since its release on Ethereum's public mainnet.
Since its launch in February, the market cap of the stablecoin USDe has grown by over 147% in the past 30 days, according to DefiLlama. CoinGecko ranks USDe as the fifth largest stablecoin in the market.
Unlike traditional stablecoins that rely on cash reserves and equivalents to maintain their peg to fiat currencies like the U.S. dollar, USDe is a yield-bearing cryptocurrency that utilizes derivative hedging against collateral positions denominated in Bitcoin (BTC), Ethereum (ETH), ETH liquid staking tokens, and Tether (USDT).
With a supply and market cap of $2 billion, Ethena's synthetic dollar has surpassed other established stablecoins. Currently, only USDT, Circle's USD Coin (USDC), DAI, and First Digital USD (FDUSD) have a higher market presence than USDe in the stablecoin market.
While USDe has experienced rapid growth in a short period, industry experts are expressing concerns about its similarities to UST, Terra's algorithmic stablecoin, which caused a $60 billion collapse in May 2022.
Notable blockchain developer and major Fantom (FTM) contributor Andre Cronje recently shared his thoughts on the matter in a detailed tweet, questioning whether USDe could follow the same path as UST.
Andre Cronje Tweet on Twitter (X)
