Originally published on: December 12, 2024
Ethena’s USDe stablecoin has made a significant leap in the world of decentralized finance, overtaking Sky’s DAI to become the third-largest stablecoin in the market. According to data from DefiLlama, USDe now follows closely behind Tether’s USDT and USD Coin USDC, with a market capitalization of under $6 billion.
While USDe still has a long way to go to catch up with the leading stablecoins, USDt and USDC, which boast market caps of around $140 billion and $40 billion respectively, its rapid growth is gaining attention in the DeFi space.
Launched earlier this year, USDe has quickly attracted stablecoin holders seeking high annual percentage returns (APRs) through Ethena’s innovative CeDeFi yield strategy. This strategy combines decentralized finance smart contracts with off-chain derivatives trading, offering holders attractive returns with less risk.
Ethena allows users to mint USDe against a variety of tokens, including Bitcoin, Ether, liquid staking tokens, and other stablecoins. The platform then hedges against volatility using off-chain financial derivatives, ensuring a stable value for USDe holders.
Despite the risks associated with CeDeFi trading strategies, such as failures on off-chain exchanges and custodians, USDe’s adoption has been impressive. In fact, Wintermute, a prominent cryptocurrency trading desk, has already started accepting USDe as trading collateral, showcasing the growing demand for this stablecoin.
Additionally, USDe has integrated with DeFi lending giant Aave, becoming the fastest-growing asset on the platform, according to Messari. Ethena’s success has also translated into significant revenue, with the platform generating around $200 million in fees in 2024 alone. This success has led the Ethena Foundation to agree to share a portion of these earnings with tokenholders, further incentivizing participation in the ecosystem.
As the native token of Ethena, ENA has experienced substantial growth, gaining approximately 5 times in value since June, as reported by CoinGecko. While Ethena’s journey to the top of the stablecoin market is still ongoing, its innovative approach to DeFi and stablecoin creation is drawing attention and setting a new standard for the industry.