A quick look at Ethena’s new stablecoin USDtb: BlackRock BUIDL fund support may drive a large amount of TradFi capital inflows

Author: Weilin, PANews

On December 16, DeFi project Ethena Labs announced that its new stablecoin USDtb was officially launched. As a U.S. dollar stablecoin based on the blockchain, 90% of USDtb’s reserve funds are invested in BlackRock’s tokenization fund BUIDL and cooperates with Securitize, the leading real-life asset tokenization company.

On the first day of launch, according to DefiLlama data, USDtb’s TVL reached $64.5 million. Previously, Ethena CEO Guy Young predicted that USDtb’s first-month TVL would reach US$500 million to US$1 billion. He also said that some TradFi entities currently have considerable exposure to what Ethena is doing despite not really having exposure to other cryptocurrencies.

Backed by BlackRock BUIDL Funds to Fight the Market Volatility of a Bear

Market

The newly launched USDtb is a relatively traditional crypto stablecoin that looks almost identical to USDC and USDT. The only difference is that Ethena backs the stablecoin with BlackRock’s BUIDL treasury funds as collateral. BUIDL is a tokenized fund that invests in U.S. dollar-equivalent assets such as cash, U.S. Treasuries, and repurchase agreements. Rather than Ethena managing financial assets, it entrusts them to different banks or different service providers in the real world. Basically, let BlackRock and Securitize take care of the entire process. Therefore, the product principles of USDtb are completely different from Ethena’s flagship stablecoin USDe.

USDtb will serve as Ethena's alternative stablecoin, taking over USDe's funds under extreme market conditions. Guy Young, CEO of Ethena, recently introduced on the Unchained podcast that USDtb looks very similar to ordinary stablecoins and has no returns of its own, so retail users who buy it will not get returns like using treasury bond funds. He stated that the two products actually work in parallel, and in 98% of cases when cryptocurrency rates look more attractive than traditional financial rates, USDe operates as it does now. Then, to the extent that circumstances change (such as entering a bear market), users always retain the option to close (positions) and enter USDtb and maintain a balance sheet in their own products.

Therefore, USDtb may help USDe holders “cope with tough market conditions.” “Ethena will be able to close hedging positions behind USDe and reallocate its backing assets to USDtb to further mitigate associated risks,” Ethena Labs said in an announcement on December 16.

The stablecoin is 90% backed by BlackRock’s BUIDL and partnered with blockchain tokenization company Securitize. Block Analiticia, one of Ethena’s committee members, noted in the approved proposal that stablecoins like USDC will account for the remaining 10% of USDtb reserves. These stablecoins can provide additional liquidity during weekends or other periods when the Treasury market cannot trade. The “core” part of USDtb’s smart contracts passed three complete audits by Pashov, Quantstamp and Cyfrin in October.

USDtb may drive large inflows of funds from TradFi

Ethena Lab’s synthetic stablecoin USDe was launched in February this year and has since grown rapidly and is now the third largest stablecoin after USDT and USDC. Since November 1, just a month and a half ago, its market value has more than doubled to nearly $6 billion, even surpassing DAI, the long-standing DeFi-native stablecoin.

The key to USDe’s success is the yield it offers. The token has an annual yield of 27%, which is much higher than the 12.5% ​​offered by DAI and USDS. USDe is created by depositing Bitcoin, Ethereum or Solana into the Ethena protocol and subsequently opening a short (put) position on a futures exchange like Bybit. This creates a so-called "delta neutral" position, where the value of the asset and the short position cancel each other out, keeping the overall price stable.

Currently, since most traders are bullish on the cryptocurrency, they pay Ethena funds to short, and the protocol transfers these funds to USDe holders through staking. As long as this continues, USDe's yield should remain higher. But if traders turn bearish, Ethena won't be able to offer such high yields.

In addition, Staked USDe (sUSDe) launched by Ethena is an income token that allows users to earn additional income by staking USDe tokens. Through staking rewards and Basis Trading strategies, sUSDe provides holders with high returns.

Blockworks Research recently tweeted about the different ways Ethena is primarily used. Pendle is the top destination for Staked USDe with assets over $1 billion, with Aave in second place. Ethena CEO Guy Young recently introduced on the Unchained podcast that approximately 50% to 60% of Pendle’s TVL is built on sUSDe. Aave has added over 1 billion TVL in a few months.

Back to the new stablecoin USDtb itself, after the launch of USDtb, Ethena’s head of growth, Seraphim Czecker, said that Ethena’s path is clear:

- Incorporate conservative TradFi into USDtb

- Get them used to USDe

- Help them understand opportunities on USDe chains such as Aave and Maker

José Maria Macedo, co-founder of blockchain research and development company Delphi Labs, predicts USDtb will become the largest tokenized Treasury product within a month of its launch. Seraphim Czecker, Ethena’s head of growth, said USDtb has the potential to scale to $100 billion as the company is now able to allocate capital efficiently in bearish market environments by “creating an APY ‘floor’ around Treasury bill rates.” “USDtb will drive a lot of money flowing into our space from TradFi,” Seraphim concluded.

Right now, Ethena has really outperformed a bunch of crypto-native protocols on a lot of different metrics. One of them is that it has always been one of the most expensive "generators". It has surpassed Tether, Uniswap, Ethereum, Jito, Solana, etc. many times, and has become an important project for DeFi user interaction.