In the latest development, the Ethena community introduced a new proposal that seeks to use Ethereum’s Layer-1 competitor Solana as a reserve asset for its synthetic dollar USDe. This development has sent the Ethena (ENA) price soaring by another 17% today to $0.39 thereby taking its market cap above $1.06 billion.
Ethena to Use Solana As A Backing Asset for USDe
Earlier today, the Ethena community introduced a new proposal for backing its synthetic dollar USDe. Interestingly, this Solana-backing mechanism proposal from Ethena is similar to the hedging mechanism employed by Ethena for BTC and ETH perpetual futures.
In addition to SOL, the proposal suggests adding Binance Liquid Staked SOL (BNSOL) and Bybit Liquid Staked SOL (bbSOL) as eligible backing assets for USDe. Thus, this expansion seeks to diversify the asset pool supporting the synthetic dollar, thereby enhancing its ability and utility in decentralized finance (DeFi).
In August this year, Ethena launched its USDe stablecoin on the Solana blockchain using Layerzero’s OFT standard. The official announcement from the Ethena Foundation reads:
“The proposed allocation would be scaled into slowly in consultation with the Risk Committee considering SOL perpetual futures shorter history of trading, less liquidity, and less historical funding rate data”.
The inclusion of Solana-backing can boost the Ethena Finance protocol revenue through SOL funding rates while unlocking $2-3 billion in additional open interest. This will allow Ethena to scale USDe beyond its current supply of $2.5 billion and thus cater to the market demand.
Etherna’s USDe Synthetic Dollar has gained huge traction in a very short period by gaining a $2.5 billion market cap and seeks direct competition with Tether. The USDe is also the first scalable, censorship-resistant, and stable crypto-native solution where it ensures peg stability using delta hedging derivatives positions.
Also, Ethena’s recent launch of the UStb stablecoin in partnership with BlockRock and Securitize strengthens its market presence, positioning USDe as a strong contender in the stablecoin space.
ENA Price Jumps 17%
ENA, the native cryptocurrency of Ethena saw a strong surge this past week moving closer to $0.40. As of press time, the ENA price is up 17% to $0.3869 with its market cap once again crossing over $1 billion amid strong bullish action. On the weekly chart, the ENA price is up by 28%.
The technical chart parttern shows that the recent breakout could lead to immediate ENA price targets of $0.5080 and $0.69. If it successfully breaches these levels, it could attain it all-time high of $1.5.
Bhushan Akolkar
Bhushan is a FinTech enthusiast with a keen understanding of financial markets. His interest in economics and finance has led him to focus on emerging Blockchain technology and cryptocurrency markets. He is committed to continuous learning and stays motivated by sharing the knowledge he acquires. In his free time, Bhushan enjoys reading thriller fiction novels and occasionally explores his culinary skills.
Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
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