๐๐Big news, BTC enthusiasts! Ethena Labs, the brains behind USDe, have now incorporated Bitcoin as a backing asset into their synthetic dollar-pegged offering. This move is set to scale USDeโs supply from its current $2 billion mark. ๐๐ฐ
๐ฅIn an announcement on April 4, Ethena Labs highlighted the strategic importance of incorporating BTC. Why? Well, it's all about scalability and liquidity. Over the past year, BTCโs open interest has surged from $10 billion to $25 billion, outpacing the growth of Ethereum (ETH) derivatives. ๐
๐Ethena Labs recognized BTCโs superior liquidity and scalability for delta hedging, offering a more secure environment for USDe users. Plus, historical data shows BTCโs resilience during bear markets, outperforming ETH in terms of funding yields. ๐ช๐
๐คBut wait, BTC lacks an inherent staking yield similar to staked Ether, right? True, but Ethena noted that staking yields of 3-4% are less impactful during bullish market conditions, where funding rates can surpass 30%. ๐ง
๐ฏEthena uses a delta hedging approach within the derivatives market to maintain USDeโs peg. This involves potentially holding short positions in Ether or ETH-related derivatives, which yield gains if the assetโs value decreases. As a result, Ethena can mitigate most of the downward fluctuations in USDeโs collateral. ๐ก๏ธ
๐With the integration of BTC, Ethena Labs aims to strengthen USDeโs backing, providing a safer and more reliable product for its users. The move also aligns with the companyโs vision for the second season of the Sats Campaign, which is focused on expanding BTC integration. ๐
๐From April 5, users will have transparent access to BTC backing positions through Ethenaโs dashboards. Stay tuned for more exciting updates! ๐๐