Decentralized finance (DeFi) protocol Ethena {{ENA}}, issuer of the $2.5 billion yield-generating USDe "synthetic dollar" token, announced Thursday it will invest its $46 million backup fund in BlackRock's and Securitize's tokenized fund BUIDL, Mountain's USDM token, Superstate's USTB and the new USDS stablecoin of Sky, formerly known as Maker.
The protocol's so-called Reserve Fund will allocate roughly $18 million in BUIDL, $13 million in USDS, $8 million in USDM and $7 million in USTB, according to a governance forum post.
We are pleased to announce the winners of the Reserve Fund RWA AllocationAfter 25 submissions, the Risk Committee decided on 4 assets that stood out across a wide range of criteria:• BUIDL (Blackrock/Securitize)• USDS (Sky)• USTB (Superstate)• USDM (Mountain) pic.twitter.com/NHyqrICvZZ
— Ethena Labs (@ethena_labs) October 10, 2024
USDe generates yield by holding spot bitcoin {{BTC}} and ether {{ETH}} while shorting, or selling, equal amounts of BTC and ETH derivatives, harvesting the difference in funding rates. The allocation will allow Ethena to earn a yield on the surplus funds accrued from protocol revenues that serve as an insurance for periods when funding rates turn negative.
Ethena's move fits into a growing trend of DeFi platforms and protocol foundations moving part of their treasury assets to tokens backed by real-world assets (RWA) such as U.S. short-term government bonds to earn a yield that's independent from crypto markets without leaving blockchain rails. This trend has helped the tokenized Treasury market triple in size in a year to $2.2 billion, rwa.xyz data shows.
Read more: MakerDAO's $1B Tokenized Treasury Investment Plan Draws Interest from BlackRock's BUIDL, Ondo, Superstate
The decision comes after Ethena laid out plans in July to invest its Reserve Fund in RWA-backed products. Some 25 issuers applied for allocation, and the final selection was made by the Ethena Risk Committee, consisting of five voting members of DeFi risk and advisory firms: Gauntlet, Block Analitica, Steakhouse, Llama Risk and Blockworks Advisory, with the Ethena Foundation as a non-voting member.
Future funds accrued in the Reserve Fund will not be invested automatically in those products, that will be a separate decision, an Ethena spokesperson told CoinDesk in email.
