It has been announced that Bitcoin (BTC) will now be accepted as collateral by Ethena Labs, the company that is responsible for the synthetic dollar-pegged commodity known as USDe
This action is being taken with the intention of facilitating significant scalability beyond its present supply of $2 billion. Ethena noted that USDe has the potential to grow by a factor of 2.5 due to the fact that Bitcoin's open interest on major cryptocurrency exchanges has increased from $10 billion to $25 million over the course of the past year.
Ethena is of the opinion that including Bitcoin as collateral will not only improve liquidity but also serve to give USDe token holders with a product that is both more secure and more sturdy.
According to the team, Bitcoin derivative markets are in the process of witnessing faster growth in comparison to Ethereum derivative markets, which offers superior scalability and liquidity for delta hedging.
Previously, USDe was supported by Ethereum (ETH), Tether (USDT), and liquid staking tokens that were based on Ether. Bitcoin was not included in this support. Binance, ByBit, and OKX are examples of centralized exchanges that Ethena uses to obtain the majority of its collateral.
Ethena observed that staking yields of three to four percent are less relevant during bull markets, when financing rates might surpass thirty percent. This is despite the fact that Bitcoin does not give a native staking income like staked Ether or Bitcoin.
When it comes to stablecoins, USDe is presently ranked fifth in terms of market capitalization, lagging behind USDT, USD Coin (USDC), Dai (DAI), and First Digital USD (FDUSD).
On the other hand, a number of members of the community, including the well-known DeFi developer Andre Cronje, have voiced their doubts regarding the long-term viability of the Ethena Labs model.
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