Ethena Labs, the developer of the Ethereum-based synthetic dollar protocol, has announced the launch of UStb, a new fiat stablecoin. Backed by the BlackRock USD Institutional Digital Liquidity Fund (BUILD) and in partnership with Securitize Markets LLC, UStb offers a distinct alternative to the existing USDe stablecoin.
BUILD, BlackRock’s first tokenized fund launched in March 2024 on a public blockchain Ethereum, allows investors to earn interest in U.S. dollars through Securitize Markets LLC. Securitize Markets LLC specializes in tokenizing real-world assets (RWA), providing investors with the opportunity to access tokenized digital assets through innovative blockchain technology projects.
BUILD invests in U.S. Treasury bills, notes and other obligations and has rapidly grown to become the largest tokenized U.S. Treasury fund, currently accumulating over $522 million in assets under management (AUM).
Differentiated Risk Profile
UStb will be fully collateralized by BlackRock’s BUILD and Securitize, ensuring its stability and reliability. Functioning similarly to a traditional stablecoin, UStb will provide users and exchange partners with a familiar and secure asset.
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
As a separate product from USDe, UStb offers a differentiated risk profile. This allows users and exchange partners to choose the option that best aligns with their specific needs and risk tolerance.
“One initial concern surrounding USDe from the community has been how the protocol responds to negative funding rate environments,” said Ethena Labs in its X post from Sept. 27. However, “despite bearish conditions over the last 6 months Ethena’s USDe has not endured a single week of negative funding.”
To further mitigate risks, Ethena’s governance will have the flexibility to adjust the backing composition of USDe between basis positions and liquid stable products, potentially incorporating UStb during periods of weak funding.
As Ethena continues to expand its partnerships with centralized exchanges (CEXs) – beyond the current integrations with Bybit and Bitget, it will offer exchange partners the choice of two distinct stablecoin products for margin collateral: USDe and UStb.
However, Ethena will be sharing more details about UStb’s timeline and new exchange integrations in the near future.
USDe: A Synthetic Stablecoin with Unique Risks
Launched in February 2024, USDe, a synthetic dollar, quickly gained traction and became the fifth-largest stablecoin by market capitalization, according to DefiLlama data. As of Sept. 26, USDe has a circulating supply of $2.54 billion.
Unlike traditional stablecoins that rely on direct fiat or asset backing, USDe employs derivative hedging strategies to maintain its U.S. dollar peg. It uses Bitcoin (BTC), Ether (ETH), Solana (SOL), and other crypto assets as collateral, with an arbitrage-based system for minting and redeeming tokens. Additionally, USDe generates yields through a cash-and-carry strategy.
However, this approach introduces certain risks. USDe’s exposure to derivatives markets, exchange counterparty risk, and collateral volatility could potentially affect its peg stability during adverse market conditions.
On Aug. 5, amid a broader crypto market selloff, USDe faced a stress test with nearly $100 million in redemptions. While the stablecoin briefly dipped to $0.997, it quickly recovered to its $1 target.
Sorry to see this much pain across the board
On the Ethena side I can confirm there are zero issues with >$50m of redemptions processed overnight which is the largest to date
The backing assets and reserve remain at >101% v USDe supply per the attestation reports linked below: pic.twitter.com/02yP5tb298
— G | Ethena (@leptokurtic_) August 5, 2024
On Sept. 18, Ethena Labs temporarily deactivated its frontend due to a security breach involving its domain registrar account.
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