Ethena’s USDe stablecoin, also called the “artificial greenback,” has seen almost $100 million in redemptions over the previous few days throughout an enormous market selloff that has seen Bitcoin fall under $50,000 and Ethereum surrender its 2024 positive factors. Vital market turbulence doubtless triggered these redemptions from customers, placing some stress on the protocol. On Monday, over $1 billion in lending trades had been liquidated on centralized exchanges and over $400 million on DeFi protocols, marking one of many largest liquidation occasions of the yr.
In the meantime, USDe managed to take care of its peg to the US greenback. Nonetheless, its worth fluctuated a bit, briefly touching $0.997 earlier than returning to the $1 mark. USDe’s present provide is over 3.1 billion tokens, up 50% from 2 billion in April. USDe differs from conventional stablecoins in that it makes use of a mechanism that doesn’t depend on direct collateral in fiat or bodily belongings. As an alternative, it makes use of by-product hedging methods with collateral positions involving Ether and Bitcoin, in addition to an arbitrage system for issuance and redemption to take care of the peg to the US greenback.
Moreover, USDe makes use of a cash-and-carry technique to generate returns which can be distributed again to stablecoin holders. This technique consists of ways corresponding to staking ETH collected from those that mint USDe with Ethereum validators whereas concurrently shorting an equal quantity of ether futures. Ethena beforehand allowed ETH or liquid staking tokens for use as collateral for USDe issuance. Bitcoin has just lately grow to be accepted as collateral as effectively.
Picture: The Crypto Occasions
