Updated: April 4, 2024, 4:15 PM EDT
Etena Institute has added Bitcoin as a backing asset for the USDe synthetic dollar as traders welcome the return of the world's oldest digital asset.
Decentralized finance (DeFi) protocols Said In a series of posts from X on Thursday, it said that backing USDe with Bitcoin would allow the dollar-pegged token to scale more than 2.5x, making its products safer for traders. The move comes as the Bitcoin derivatives market continues to outperform its Ether-based counterpart.
“As Ethena approaches $10 billion, this provides stronger support and ultimately a safer product for users,” the protocol said Thursday. He added that the current supply of USDe is worth about $2 billion.
Ethena also pointed to Bitcoin's superior liquidity and duration profile in DeltaHedge compared to liquidity staking tokens as factors in the decision to add Bitcoin as a backing asset.
According to the Ethena Labs website, USDe has so far only been backed by Ether Liquid staking tokens. However, token holders have shown strong interest in trading Bitcoin.
Etena said Bitcoin's open interest has increased 150% over the past year to $25 billion, which has led to more than doubling USDe's ability to scale. Meanwhile, Ether's open interest increased by just 100% to $10 billion during the same period, according to data cited by the protocol.
The relatively strong demand for Bitcoin comes amid an impressive rise in the virtual token's speculative value. At the time of writing, Bitcoin was trading at $68,384, up 4% in the past 24 hours, according to price data from The Block.
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