Ethena Labs has recently made a groundbreaking announcement regarding the launch of its new stablecoin, USDtb. This stablecoin will be backed by BlackRock’s tokenized fund, the USD Institutional Digital Liquidity Fund (BUIDL), accounting for 90% of its backing. The partnership was made possible through the facilitation of Securitize.
USDtb will function independently from Ethena’s existing algorithmic stablecoin, USDe, offering users and exchange partners a stablecoin with a unique risk profile. The Risk Committee at Ethena has given its approval for USDtb to potentially serve as a backing asset for USDe, enhancing its ability to navigate volatile market conditions.
The design of USDtb is focused on providing flexibility and risk mitigation within Ethena’s ecosystem and beyond. The stablecoin is set to receive incentives from Spark’s $1 billion Tokenization Grand Prix, aimed at boosting tokenization efforts. Additionally, USDtb is designed to be inherently multichain, operating as LayerZero’s Omnichain Fungible Token (OFT), allowing users to transfer it across different blockchains including Ethereum, Base, Solana, and Arbitrum.
To support its liquidity, USDtb will have backing from prominent market makers such as Jump, Cumberland, Wintermute, Amber, GSR, and SCB Limited. This move by Ethena Labs marks a significant advancement for stablecoins, combining the stability of traditional finance with the efficiency and scalability of blockchain. Notably, BlackRock’s BUIDL currently boasts a market cap of nearly $562 million.
Ethena’s success in the stablecoin market has been evident with the growth of its algorithmic stablecoin USDe, which has seen a 93% increase in the past 30 days, reaching a market cap of $5.6 billion and making it the third-largest stablecoin in the market. This growth can be attributed to its value accrual mechanism, offering USDe stakers a 27% annual percentage yield (APY) at present.
In a convergence of traditional finance and decentralized finance (DeFi), other DeFi protocols are also looking to leverage BlackRock’s BUIDL. Aave, a money market platform, proposed a new GHO Stability Module (GSM) based on BlackRock’s tokenized fund to support the peg of its ecosystem’s stablecoin, GHO. Additionally, BlackRock plans to expand its BUIDL offering for traditional finance institutions, considering the use of shares from its tokenized fund as collateral for derivatives trading. This move would bridge the trillion-dollar derivatives market with the emerging tokenized money funds sector, currently valued at approximately $3 billion as of the latest data.
The integration of traditional finance with DeFi through partnerships like the one between Ethena Labs and BlackRock signifies a significant evolution in the financial landscape, offering new possibilities for stability, efficiency, and growth in the digital asset space.