Ethena is set to launch a new stablecoin, UStb, in collaboration with the real-world asset tokenization platform Securitize. UStb aims to function similarly to traditional stablecoins while investing its reserves in BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL), which is tokenized on Ethereum.
BlackRock’s BUIDL fund focuses on investments in U.S. dollars, short-term U.S. Treasury bills, and repurchase agreements. Since its launch in March, BUIDL has rapidly grown, becoming the largest tokenized U.S. Treasuries fund with over $522 million in assets under management.
The market for tokenized government securities has exceeded $2 billion, according to 21.co, the parent company of the bitcoin exchange-traded fund provider 21Shares.
UStb will operate as a wholly independent product, providing an alternative risk profile compared to Ethena’s existing USDe stablecoin. USDe, launched in February, became the fifth-largest stablecoin by market cap, boasting a current circulating supply of $2.6 billion.
Unlike traditional stablecoins, USDe employs derivative hedging strategies instead of direct fiat backing, using assets like ether, bitcoin, and solana as collateral. This introduces certain risks, including exposure to derivatives markets and collateral volatility. In August, USDe experienced nearly $100 million in redemptions during a market selloff.
The introduction of UStb may help USDe manage market volatility. Ethena plans to reallocate backing assets to UStb during negative funding rates as deemed necessary by its governance.
Ethena intends for UStb to serve as an alternative margin collateral on centralized exchanges, including Bybit and Bitget. In February, Ethena Labs raised $14 million in funding, achieving a valuation of $300 million.
