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Inspired by an article by Arthur Hayes, Ethena aims to create a stablecoin called USDe that is backed by derivatives. The stablecoin will maintain its peg to the US dollar by using collateral from users to hedge price exposure through shorting Ethereum using perpetual swaps. This mechanism, known as “delta-neutral” stability, ensures that any gains or losses from Ethereum and perpetual swaps are offset, enabling the stablecoin to maintain a constant peg of $1.
In addition to the stablecoin, Ethena is developing the first-ever digitally native savings bond built on top of the stablecoin. The bond token will function similarly to a US treasury but without any reliance on centralized banking institutions or government entities. Together, the stablecoin and bond asset will form a highly scalable digital currency and savings platform, providing an alternative to traditional banking systems for users worldwide.
Ethena’s goal is to address the need for accessible, permissionless dollar-denominated savings instruments beyond the US. By offering a stablecoin and bond asset that operate independently of traditional financial systems and banking infrastructure, Ethena aims to provide a widely accessible and permissionless internet bond.
The project intends to mitigate the risks associated with existing fiat-based stablecoins, such as custodial and regulatory risks shifted onto users. Ethena’s stablecoin also aims to address issues of overcollateralization and capital efficiency by breaking ties with external banking infrastructure.
With the seed funding secured, Ethena plans to launch its stablecoin and bond asset in the third quarter of 2023. The team will focus on completing the testnet phase, forming partnerships with industry leaders, and conducting smart contract audits to ensure the security and efficiency of the protocol.
Investors are optimistic about Ethena’s innovative approach to stablecoins, emphasizing the potential for stability, decentralization, and capital efficiency. The partnership with Dragonfly and other industry leaders will help bring Ethena’s vision to life and create a breakthrough stablecoin with broad user appeal.
Ethena’s ambitious project seeks to revolutionize the world of stablecoins and provide a global savings instrument that is accessible to investors of all means. By leveraging the power of Ethereum and derivatives, Ethena aims to offer a new financial infrastructure that is transparent, secure, and independent of traditional banking systems.
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