Bitrabo Editorial
An analyst forecasts a looming threat for traditional fiat-backed stablecoins such as USDT and USDC amidst the rise in popularity of Ethena’s USDe following its collaboration with Bybit, a platform for perpetual trading within the crypto realm.
Ethena Joins Forces with ByBit
Unlike other prominent stablecoins that are fiat-backed, USDe is a “synthetic dollar” supported by various assets, primarily staked ETH derivatives and short positions from centralized exchanges like Binance.
Ethena, the creator of USDe, heralded the partnership with Bybit, expressing optimism about the collaboration’s potential to revolutionize cryptocurrency trading. Traders can earn a yield on USDe, which can serve as collateral for futures trading. Furthermore, users can engage in spot trading pairs with Bitcoin and Ethereum without incurring fees.
Impact on USDT’s Dominance
Despite the positive outlook for ENA and the projected surge in USDe demand, an analyst remains dubious. The arrangement is viewed as a direct challenge to the dominance of popular stablecoins, USDT and USDC, commonly utilized across various crypto perpetual trading platforms.
Ethena’s enticing offerings through integration with Bybit could sway traders away from USDT and USDC. By opting for USDe over the traditional stablecoins, traders can earn a yield that offsets funding fees, with the current double-digit yield standing at 15%. This practice of providing “free money” for holding USDe is expected to impact the prevailing dominance of USDT and USDC.
However, concerns arise regarding the sustainability of these high yields, with critics questioning the adequacy of the $10 million Reserve Fund in safeguarding against depegging when yields decline.
Currently, USDT ranks as the third most valuable cryptocurrency with a market cap exceeding $111 billion. As the crypto sector witnesses increased adoption and price rebounds from recent dips, USDT is poised to solidify its standing within the crypto hierarchy.
Conversely, USDe boasts a TVL exceeding $2.5 billion and boasts over 175,000 holders as per Ethena’s website data.