UPDATED: Apr 4, 2024 4:15 PM EDT
Ethena Labs has added bitcoin as a backup to its synthetic US dollar, as traders embrace a revival of the world’s oldest digital asset.
The decentralized finance (DeFi) protocol said Thursday in a series of posts on The move comes as bitcoin derivatives markets are outpacing their ether-based equivalents.
“As Ethena gets closer to $10 billion, it will provide more robust support and ultimately a more secure product for users,” the protocol said Thursday. USDe’s current offering is worth about $2 billion, it added.
Ethena also pointed to bitcoin’s superior liquidity and maturity profiles for delta hedging compared to liquid staking tokens as a factor in its decision to add bitcoin as a backing asset.
Until now, USDe has only been backed by ether-liquid staking tokens, according to the Ethena Labs website. However, token holders are showing greater interest in trading bitcoin.
Bitcoin open interest has increased 150% to $25 billion over the past year, leading to a more than doubling of USDe’s scalability, according to Ethena. Meanwhile, open interest in ether grew just 100% to $10 billion over the same period, according to the data the protocol cited.
The relatively strong demand for Bitcoin comes amid a spectacular rise in the virtual token’s speculative value. Bitcoin is trading at $68,384 at the time of writing, The Block’s price data shows, up 4% in the past 24 hours.
About the author
Elizabeth Napolitano is a data reporter who reports business and technology news, with a focus on cryptocurrencies. Before joining The Block, Elizabeth reported on BigTech, AI, crypto and video games for CBS Moneywatch. As a CoinDesk reporter, she covered DeFi, NFTs and US courts. She has an MA in Journalism from CUNY. Follow her on X: @LizKNapolitano
