Ethena Community Proposes Adding SOL As Collateral Asset For USDe Stablecoin
In Brief
Eethena community introduced a proposal suggesting to add Solana’s SOL token as a backing asset for USDe stablecoin.
Community of Decentralized finance (DeFi) protocol for the USDe stablecoin, Eethena, introduced a proposal suggesting to add Solana’s SOL token as a backing asset for USDe.
The proposal recommends utilizing SOL as part of USDe’s backing in a manner similar to Eethena’s current hedging mechanics, which uses BTC and ETH perpetual futures. The allocation of SOL would be implemented gradually, with input from the Risk Committee. This is due to factors such as SOL perpetual futures’ relatively shorter trading history, lower liquidity, and limited historical data on funding rates.
Despite these considerations, SOL’s approximately $2 billion open interest across venues where Eethena already conducts hedging activities, along with more favorable funding conditions compared to BTC and ETH in 2024, presents a promising opportunity. This could help strengthen the connection between Eethena, USDe, and Solana’s ecosystem, which is one of the largest in the cryptocurrency space, and potentially boost protocol revenue under favorable market conditions.
Additionally, the proposal recommends including Binance Liquid Staked SOL (BNSOL) and Bybit Liquid Staked SOL (bbSOL) as part of the SOL allocation for USDe’s backing. These liquid staked SOL tokens would be included in the same proportion as ETH liquid staked tokens (LSTs) are to the total ETH allocation within USDe’s backing structure.
Over the 7-day period following the publication of the proposal, the Risk Committee will review and make a decision.
Ethena Labs Launches USDe On Solana
Ethena Labs provides a cryptocurrency-based alternative to traditional financial systems. The USDe stablecoin offers a scalable solution by employing delta-hedging strategies, with collateral derived from Ethereum and Bitcoin.
It is fully backed and can be seamlessly integrated into both centralized and decentralized financial systems. The stablecoin maintains its peg through delta-hedging derivatives, which are backed by collateral held by the protocol. This mechanism helps ensure that its value remains relatively stable in relation to both spot cryptocurrency assets and futures positions
Ethena Labs announced the launch of USDe on the Solana blockchain using Layer Zero’s OFT standard in August. Alongside this launch, the possibility of incorporating SOL as a backing asset for USDe was also introduced, subject to Risk Committee approval.
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About The Author
Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
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Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
