Ethena Labs has announced the launch of UStb, a new stablecoin that will be backed by the BlackRock USD Institutional Digital Liquidity Fund (BUIDL).

BUIDL is a tokenized fund on the Ethereum blockchain, positioning itself at the forefront of the real asset (RWA) revolution.

How UStb can solve USDe limitations

UStb aims to mirror the stability of traditional stablecoins while incorporating an innovative approach by anchoring its value to BUIDL. This fund is comprised of US dollars, short-term US Treasuries, and repurchase agreements.

Since its launch in March, BUIDL has accumulated over $513 million in assets, establishing itself as the largest tokenized U.S. Treasury bond fund.

The tokenized government bond market has expanded significantly, now exceeding $2.22 billion. This growth highlights the growing trust in blockchain-enabled financial solutions.

Tokenized securities market. Source: rwa.xyz

In collaboration with Securitize, Ethena plans to enhance the stablecoin market. Securitize currently oversees over $950 million in tokenized investments and has played a crucial role in tokenizing funds for BlackRock.

Distinctively, UStb offers a different risk profile compared to Ethena’s existing USDe stablecoin. Launched earlier this year, USDe has quickly risen to become the fifth-largest stablecoin by market cap, with a current supply of $2.55 billion.

Unlike USDe, which relies on a mix of cryptocurrencies and derivatives strategies for stability, UStb offers a relatively safer investment alternative by backing it directly with low-risk, liquid assets. USDe has faced some challenges, such as the risk of losing peg if the funding rate turns negative for an extended period.

Through this new stablecoin, Ethena Labs aims to solve some of the limitations of USDe.

“If governance deems it necessary and appropriate in negative funding conditions, Ethena may close out hedging positions and reallocate these supporting assets to UStb to further mitigate the risk associated with negative funding rate environments,” Ethena Labs explained.

ENA is high

This innovation comes at a transformative time for Ethena. Following the stablecoin’s unveiling, Ethena’s native token, ENA, saw a 13.29% increase in value, reflecting a positive market reception.

Ethena (ENA) Chart on TradingView

Ethena Labs, the driving force behind UStb, secured $14 million in a strategic funding round earlier this year. It achieved a $300 million valuation in a round led by Dragonfly and Maelstrom.

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