Ethena announced that it will soon cooperate with asset tokenization platform Securitize to launch a new product - a stablecoin called UStb. UStb is designed in the same way as traditional stablecoins, and Ethena is expected to invest its reserves in BlackRock’s “tokenization fund” BUIDL.

We are excited to announce Ethena's newest product offering: UStb

UStb will be fully backed by @Blackrock BUIDL in partnership with @Securitize, enabling a separate fiat stablecoin product alongside USDe

Details below on why this is important: pic.twitter.com/jOIoMef7W3

— Ethena Labs (@ethena_labs) September 26, 2024

UStb is designed to provide users with reliable and secure digital assets similar to traditional stablecoins. By staking UStb in BlackRock's BUIDL, it can be used as a strategy to enhance its hedging capabilities and optimize asset allocation. This move not only demonstrates Ethena’s commitment to innovation, but also highlights the growing importance of stablecoins in the cryptocurrency ecosystem.

BlackRock's BUIDL fund invests in U.S. dollars, short-term U.S. Treasury bills and repurchase agreements. Since its launch in March of this year, BUIDL has quickly grown to become the largest tokenized U.S. Treasury fund with over $522 million in assets under management.

The team stated that UStb will exist as a "completely independent product", providing an alternative and completely different risk profile compared to Ethena's existing USDe stablecoin, "is a platform that provides users and exchange partners with the same characteristics as USDe. New products with differentiated risk profiles”.

USDe differs from traditional stablecoins in that it uses derivative commodity hedging strategies rather than direct fiat currency or asset backing. It relies on Ethereum, Bitcoin, Solana, and other crypto-assets as collateral and maintains its peg to the U.S. dollar through an arbitrage-based minting and redemption system. It also generates income through a cash-and-carry strategy. However, USDe carries risks, including derivatives market risk, exchange counterparty risk and collateral volatility, which may affect the stability of its peg during adverse market conditions.

During the crypto market sell-off stress test in August, the stablecoin saw nearly $100 million in redemptions, briefly falling slightly to $0.997 before returning to its $1 target.

Ethena stated that UStb can help USDe cope with difficult market conditions. The team explained, “If Ethena governance deems it necessary and appropriate, during periods of negative funding rates, Ethena will be able to close USDe-based hedging positions and reallocate its backing assets to UStb to further mitigate related risks.”

Ethena also intends to use UStb as an alternative to USDe as margin collateral for the centralized exchanges it partners with, including Bybit and Bitget. The exact release date and exchange integration details will be announced in the coming weeks.

〈Ethena plans to issue a new stable currency UStb and invest its reserves in BlackRock’s “Tokenization Fund BUIDL”〉 This article was first published in "Blocker".