Ethena Labs, the developer of decentralized stablecoin protocols, has announced the launch of its new stablecoin. UStb (USTB) is fully backed by BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL).
This latest offering is an extension of the partnership agreement between Ethena, BlackRock, and Securitize, a digital securities and real-world asset tokenization platform. Ethena’s current USDe stablecoin is collateralized through a synthetic asset.
Per the Company’s announcement, UStb will work entirely likr a traditional asset-backed stablecoin, another product with a different risk profile. USDe, which uses derivative hedging and cryptocurrency as collateral, is different from UStb’s asset-backed model.
The partnership with BlackRock is intended to introduce stability and credibility to UStb, utilizing the BUIDL fund, which is dedicated to USD, short-term U.S. Treasury bills, and RP agreements, currently overseeing over $522 million in tokenized assets.
Synergy Between Ethena Labs’ UStb and USDe in Different Market Conditions
Ethena Labs has developed UStb as a distinct product from USDe so that users and exchange partners can choose from a range of stablecoins with different risk profiles. USDe, which started operation in February 2024, has managed to hold on to its USD peg.
It has done that through arbitrage-based minting and redemption mechanisms. Collateral in the form of Bitcoin, Ethereum, and Solana among others, was taken. However, a potential risk arises from the fact that USDe is engaged in the derivatives market and is sensitive to collateral fluctuations, especially when the market is bearish.
To address these risks, Ethena Labs suggested USDe could adapt its backing composition in the presence of poor funding conditions by using UStb. If the governance decides so, USDe can transfer its backing assets to UStb to help the stablecoin to survive negative funding rate conditions. This flexibility improves Ethena’s position to sustain stability in the course of market changes.
Expansion of Collateral Offerings on Centralized Exchanges
Ethena Labs also aims to increase its collateral listings on centralized exchanges. That is, in addition to its current partnerships with Bybit and Bitget.
With the launch of UStb, there is now a new stablecoin to use as margin collateral for exchanges and other users who are looking for unique stablecoin options. To this end, Ethena plans to provide exchange partners with two choices of collateral – the USDe backed by derivatives and the asset-backed UStb, thus enabling the partners to adapt to market conditions.
Further updates on the UStb launch timeline and new exchange integrations are expected to be shared soon. Ethena’s strategy aims to broaden the adoption of its stablecoins, enhancing their accessibility and utility within the crypto ecosystem.
ENA Governance Token Surges Following UStb Announcement
Following the announcement of UStb, Ethena Labs’ ENA governance token experienced a notable surge, rising approximately 15% within 24 hours. The token’s price went from $0.307 to $0.378, while trading volume spiked to around $196.1 million.
Upon the announcement of UStb, the governance token of Ethena Labs’ ENA saw a significant rebound. There was a 19% increase within a day. The trading volume surged to as high as $1961 million.
Source: CoinMarketCap
The price jump reflects growing investor confidence in Ethena’s expanding suite of stablecoin products. The USDe stablecoin offered by Ethena has been successful so far with a market capitalization of $2.6 billion. The launching of UStb is anticipated to work alongside USDe to expand the application of stablecoins and strengthen the position of Ethena Labs in the DeFi sphere.
