BlackRock and Securitize back Ethena’s new stablecoin

September 26, 2024 at 3:10 pm

Edited by Jayson Derrick

News

Ethena Labs is launching a new stablecoin project fully backed by BlackRock’s Ethereum-based tokenized fund and Securitize.

Synthetic dollar issuer Ethena (ENA) unveiled its UStb fiat stablecoin product, which is supported by the BlackRock USD Institutional Digital Liquidity Fund, known as BUIDL, and private market lender Securitize. UStb was designed to operate identically to a traditional stablecoin, with BlackRock and its fund distributor Securitize managing collateral for the new fiat-pegged offering.

Ethena’s Sept. 26 statement announcing UStb hinted that community concerns about Ethena USDe (USDE), the protocol’s existing stablecoin, spurred the creation of this BlackRock-backed asset.

Concerns were raised regarding how USDe might respond to negative funding rate situations. Figures like Fantom developer Andre Cronje questioned systemic risks, likening the asset to the defunct TerraUSD.

Ethena noted that these fears were never realized in over six months of USDe trading, despite bearish market conditions that typically result in negative funding. Introducing UStb serves as another cushion against perceived risks should funding rates plummet, according to the team’s statement on X.

If governance deems it necessary and appropriate in negative funding conditions, Ethena can close hedging positions and re-allocate those backing assets to UStb to further ameliorate risk associated with negative funding rate environments.

Ethena Labs

We are excited to announce Ethena's newest product offering: UStb

UStb will be fully backed by @Blackrock BUIDL in partnership with @Securitize, enabling a separate fiat stablecoin product alongside USDe

Details below on why this is important: pic.twitter.com/jOIoMef7W3
— Ethena Labs (@ethena_labs) September 26, 2024

Ethena’s UStb is one of the first stablecoin projects BlackRock has partnered with. BlackRock’s BUIDL operates as the largest tokenized treasury fund on any blockchain and runs atop Ethereum (ETH).

According to DefiLlama, BUIDL has amassed over $522 million in deposits, calculated as total value locked in crypto terms.

BlackRock may be testing the waters in fiat-pegged token markets as the firm integrates more crypto-related investment vehicles. The $10 trillion asset giant also issues spot exchange-traded funds for Bitcoin (BTC) and Ether.