Ethena Labs has announced that it has added Bitcoin as a USDe backing asset. The objective is to back the scalability by up to 2.5 times. Bitcoin has been chosen for a couple of reasons. First, it brings sufficient liquidity to the table. Second, there is a resurgence in its value. Third, it has a strong duration profile.
This effectively replaces Ether liquid staking tokens that have been backing the synthetic dollar of Ethena Labs.
Ethena Labs has detailed the development through a post on X, stating that it has the potential to significantly scale the current supply of $2 billion. The 2.5 times scaling opportunity is based on the fact that there is $25 billion of BTC open interest available for Ethena Labs to delta hedge. They have also highlighted in the announcement that the move follows an unprecedented growth of USDe.
BTC was able to produce a yield of almost 2% during the bearish run in 2022, which is another incentive to choose it over ETH. That was in sharp contrast to the 0% yields generated by ETH. Moving forward, Ethena Labs is working to make available BTC backing positions in the dashboards.
BTC has surged by 1.34% in the last 24 hours at the time of writing this article. The token is listed at $67,187.77. While that is a drop of 3.94% in the last 7 days, it reflects a slight rise of 0.25% in the last 30 days.
Ethena Labs adding Bitcoin as a USDe backing asset comes at a crucial time. The community has its eyes on Halving, which is tentatively scheduled to happen by April 20, 2024.
The development comes after Ethena Labs announced its partnership with Immunefi. They have come together to launch a bug bounty program for Ethena Labs. Participants in the program only have to find a bug in Ethena’s smart contracts to be eligible for a reward of 10% of the funds directly affected. The maximum limit is $3 million.
It is live effective April 4, 2024, and participants must complete KYC at the time of registration.
Ethena Labs has previously also joined hands with Binance Futures. It was for a campaign wherein the total prize pool was 700,000 ENA tokens. Participants only had to make their first Futures trade and refer their friends to trade futures.
That said, ENA has been down by 16.41% in the last 24 hours and is listed at $0.9167 at the time of articulating this piece. However, that reflects a rise of 33.17% in the previous seven days. Its Market Cap and 24-hour volume are heavily down by 16.56% and 58.82%, respectively.
Ethena Labs continues to mark developments in the ecosystem. This time is the addition of Bitcoin as a USDe backing asset, leveraging its liquidity and duration profile to the advantage of scaling up to 2.5 times.