Synthetic dollar protocol Ethena Labs and tokenization platform Securitize have submitted a joint proposal to feature Ethena’s USDtb stablecoin in Spark’s $1 billion Tokenization Grand Prix. The competition seeks to onboard real-world assets (RWAs) to decentralized finance by offering liquidity to selected participants.  

As part of the proposal, Ethena has included the introduction of a swap facility for USDtb and USDe — another of its stablecoins. This feature would enable the Sky ecosystem to manage and reallocate between the two stablecoins in response to shifts in interest rates or market conditions. 

Applications are said to be evaluated by a panel including Phoenix Labs and Steakhouse Financial under criteria such as competitive pricing, liquidity, and alignment with Spark’s strategic goals. Final selections will be determined through a governance vote by Sky tokenholders.

Ethena claims to currently contribute nearly $120 million in annual revenue to the Sky ecosystem, formerly MakerDAO. 

Related: Stablecoin trading volume surges to $1.8T in November

Risk profile alternative

USDtb, set to launch next week, is backed by BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL) — its tokenized US Treasury fund launched on the Ethereum blockchain in March 2024 and currently holding over $533 million in tokenized assets. 

BlackRock's BUIDL market cap. Source: STM

Ethena’s upcoming stablecoin will offer a different risk profile compared to its existing synthetic dollar, USDe, which uses derivative hedging strategies involving various cryptocurrencies, making it more sensitive to market fluctuations. 

Ethena Labs has indicated that integrating UStb could enhance its synthetic dollar performance during periods of weak funding conditions. Specifically, USDe’s backing composition can be dynamically adjusted to potentially incorporate USDtb to mitigate risks associated with negative funding rates.

CoinGecko data indicates that Ethena’s USDe’s market value has passed $4.3 billion as of Nov. 29. According to a recent analysis by CCData, its performance can be attributed to “heightened interest in the Ethena ecosystem after its proposal to activate revenue share for Ethena (ENA) tokenholders.” 

Related: Ethena adopts fee-sharing proposal for ENA token