Ethena Expands to Solana and Adds SOL to USDe Collateral Basket

Synthetic stablecoin startup Ethena Labs is broadening its reach in the crypto industry by integrating Solana and partially backing its flagship ‘synthetic dollar’ USDe with SOL. The integration is being facilitated by the cross-chain interoperability protocol LayerZero.

Solana users can now buy, send, and receive USDe on Solana and potentially accrue rewards via sUSDe, the staked version of the token. Ethena Labs has also added SOL as an asset to back USDe, joining Bitcoin, which was added in early April as a collateral asset.

USDe holders on Solana can also earn Ethena sats by staking USDe on Kamino, Orca, and Drift.

“Given Solana’s standing as the third largest blockchain by TVL, Ethena is confident that this integration will significantly increase the adoption of USDe and sUSDe – providing a whole new market of traders with a reward-accruing asset in sUSDe that substantially improves upon the traditional stablecoin experience,” reads a release shared with The Defiant.

Declining Market Capitalization

The move to integrate with Solana could be a way to address Ethena’s dropping market capitalization.

According to CoinGecko, USDe’s market cap is down 14% to $3.1 billion from $3.6 billion in early July. That still lands the stablecoin in fourth place among stablecoins, behind USDT, USDC, and DAI.

ENA, the project’s native token which launched in April at a $1 billion market cap with an airdrop for early adopters, now sits at half that size, only four months later. It trades for $0.27, having shed 33% of its value in the past 30 days, according to CoinGecko.

Ethena Labs made waves when it launched its synthetic dollar, USDe, thanks to its high yield and novel mechanism to defend the token’s peg.

USDe primarily backs its token (which is pegged to $1) with staked Ethereum, while also hedging its stETH holdings with short ETH positions on centralized exchanges. Both stETH and the short positions contribute to yield that’s passed on to USDe stakers.

The model has been lauded by many in the crypto community–while also triggering LUNA PTSD for its double-digit yield.