Ethena Launches UStb: A New Stablecoin Backed by Tokenized Treasury Bonds via BlackRock’s BUIDL Fund
Ethena, a major player in the world of stablecoins, has unveiled its plan to launch a new stablecoin called UStb.
Unlike their existing stablecoin, USDe, UStb will be backed by BlackRock’s tokenized US Treasury Bond fund, known as BUIDL. This strategic move aims to diversify Ethena’s stablecoin offerings by introducing an option based on real assets, while creating an alternative to their already widely adopted synthetic stablecoin.
USDe: The Successful Synthetic Stablecoin
Since its launch in February, USDe has quickly risen to become the fifth largest stablecoin by market capitalization, with a circulating supply of $2.6 billion. Unlike traditional stablecoins backed by dollar reserves or real assets, USDe relies on derivative hedging strategies.
Its operation is based on an arbitrage-based mint and redemption system, maintaining its peg to the US dollar through collateral in ETH, BTC, SOL, and other crypto assets. Additionally, USDe generates returns through a ‘cash-and-carry’ strategy.
However, this approach also comes with risks. The use of derivatives, exposure to exchange counterparty risk, and volatility of the collateral can affect the stability of the peg to the dollar, especially during unfavorable market conditions. This was the case in August when the stablecoin experienced nearly $100 million in redemptions during a period of market turbulence, briefly pushing its price down to $0.997 before returning to its $1 peg.
UStb: A New Approach Based on Real Assets
With the launch of UStb, Ethena is taking a distinct approach by relying on real-world assets. UStb will be linked to tokenized US Treasury Bonds through BlackRock’s BUIDL fund. This fund, tokenized on Ethereum, is an institutional liquidity pool that invests in short-term US Treasury Bonds, repurchase agreements, and US dollars. Since its launch in March, BUIDL has quickly become the largest tokenized Treasury Bond fund, managing over $522 million in assets.
The market for tokenized government securities has grown significantly, now reaching over $2 billion, according to data from asset management company 21.co. Securitize, a platform specializing in the tokenization of real-world assets and a partner of Ethena for the UStb launch, currently manages over $950 million in tokenized investments for financial giants like BlackRock, Hamilton Lane, and KKR.
Differentiation and Risk Strategy
Unlike USDe, UStb will be a completely independent entity offering risk diversification. While USDe exposes users to risks associated with derivatives and crypto market fluctuations, UStb offers a more stable and less volatile reserve option. BlackRock’s BUIDL fund brings asset-based indexing such as US Treasury Bonds, providing an alternative for investors seeking a stable exposure in the stablecoin market.
According to Ethena’s announcement, the introduction of UStb also aims to mitigate risks associated with USDe, particularly during challenging market conditions. In fact, when funding rates are negative, Ethena will be able to close underlying hedge positions of USDe, if necessary, and reallocate its reserve assets to UStb to mitigate risks.
Furthermore, Ethena foresees UStb being used as an alternative to USDe as collateral on partnered centralized exchange platforms, including Bybit and Bitget.
