Ethena's USDe Flips DAI to Become Third-largest Stablecoin

Ethena Labs’ synthetic dollar, USDe, is now the third largest stablecoin behind USDT and USDC after more than doubling its market capitalization since Nov. 1.
At $5.5 billion, USDe has overtaken DeFi stalwart MakerDAO’s DAI (now sUSD), which sits at just under $5.2 billion.

USDe is collateralized by major crypto assets, primarily BTC and ETH, which are hedged by the protocol through short positions on centralized exchanges like Binance and Bybit. The funding fees earned on these short positions are the main source of yield for USDe stakers.
As demand for leverage rises amid the ongoing crypto rally, so does Ethena’s yield, currently at 27%, according to the website.
While USDe’s market capitalization has remained stable at around $2.5 billion since April, its recent growth spurt came after sUSDe - the staked version of USDe - was added as a collateral asset on Aave last month, enabling traders to leverage Ethena’s yield by borrowing other stablecoins.
The integration has been a resounding success, with Aave highlighting that sUSDe is the fastest-growing asset ever added to DeFi’s largest money market.
Dubbed the ‘Aavethena’ strategy by Seraphim, Head of Growth at Ethena Labs, this involves depositing sUSDe as collateral, borrowing USDT or USDC, and swapping the borrowed stablecoins for more sUSDe, which is again deposited into Aave.
Seraphim also noted that the integration of sUSDe has caused stablecoin rates on Aave to rise.
“Markets don’t work in isolation. sUSDe lifted Aave rates to >20% on stables, and the same will happen everywhere else in DeFi,” he posted on Dec. 6.
Meanwhile, Ethena's ENA governance token has also been on a tear after governance approved a ‘fee switch’ last month that will enable revenue-sharing. The token is up 70% in the past 30 days.
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