- Ethena Labs proposes using Solana (SOL) as collateral for USDe, its synthetic stablecoin
- If approved, SOL could represent 5-10% of USDe’s collateral, with an initial allocation target of $100-200 million
- The proposal includes using liquid staking tokens (LST) like BNSOL and bbSOL, mirroring the current use of ETH LSTs
Ethena Labs, the entity responsible for the development and maintenance of USDe, has proposed integrating SOL as part of the collateral mix for its synthetic stablecoin, which makes up its treasury.
SOL Integration: A Strategic Move for USDe’s Treasury
USDe differs from stablecoins like Tether’s USDT or Circle’s USDC because it’s a synthetic stablecoin, meaning it’s not backed by fiat assets in a 1:1 ratio. Instead, it maintains its $1 peg through stablecoin collateral and by leveraging a covered cash-and-carry operation.
This approach involves taking futures positions with broad open interest available to stabilize the value, supported by a reserve fund to manage risk in fluctuating market conditions.
If the proposal is approved by Ethena’s Risk Committee—independent from Ethena Labs—SOL will be gradually integrated as a collateral asset for USDe, with an initial allocation target of $100-200 million in SOL positions. This initial allocation would represent around 5-10% of SOL’s open interest, similar to its 3% share of global BTC open interest and 9% of ETH.
The proposal also considers using liquid staking tokens (LST) like BNSOL and bbSOL, in a manner similar to how Ethena currently utilizes ETH LSTs, which account for one-third of its ETH allocation.
Recently, Ethena announced that it had allocated $46 million from its USDe reserve fund for investments in real-world tokenized assets, such as BlackRock’s BUIDL, Mountain’s USDM, Superstate’s USTB, and Sky’s USDS, in line with DeFi’s trend toward generating yields from asset-backed tokens.
Wrapping It Up
In conclusion, Ethena Labs’ proposal to integrate SOL as collateral for USDe shows a strategic shift towards diversifying its treasury.
If the plan gets the green light, it could not only bolster USDe’s stability but also align with the growing DeFi trend of using real-world asset-backed tokens for yield generation.
What do you think about it? I believe this could be an interesting move for both USDe and the broader DeFi space.
