ARK Analyst Sees USDe Supply Reaching $40 Billion in Next 18 Months

Lorenzo Valente, Director of Digital Assets Research at ARK Invest, has made a prediction about the future of USDe supply. He noted that the synthetic dollar protocol's supply had previously bottomed at $3.8 billion and has since risen by approximately 30%, rebounding to nearly $5 billion. The average annualized yield of sUSDe approached or even fell below SOFR due to inverted or low funding rates in the crypto market, causing USDe collateral to shift more toward off-chain yield assets such as Treasuries.

According to Valente, with the U.S. stock market valued at approximately $70 trillion and growing over 8% annually, sustained long-term demand could generate persistent positive funding rates for USDe. Stocks offer lower volatility and lower hedging costs compared to traditional assets, making them an attractive option for investors. This marks the first time USDe has a clear pathway to expand its supply beyond $20 billion.

Valente believes that reaching $30 to $40 billion within the next 12 to 18 months would not be surprising, the ceiling has shifted from crypto open interest to tokenized stock open interest. Ethena's infrastructure and operations have been proven, and Ethena Pay is expected to further drive USDe demand from the demand side; protocols, chains, and treasuries that facilitate USDe supply and circulation strategies will be the primary beneficiaries.