Ethena's USDe Stablecoin Now Backed by Tokenized Stocks

Ethena Labs has made a significant change to its USDe stablecoin by backing part of it with tokenized stocks for the first time. The company is using Binance's bStocks and shorting equity futures to hedge, which founder Guy Young calls 'the biggest change' since the token launched.

This new model allows Ethena to tap into a much larger market - the global market for real-world assets like stocks, bonds, and real estate is around $150 trillion, while the entire crypto market is worth about $2.5 trillion.

The USDe stablecoin now holds Binance's bStocks as the spot leg of a basis trade and shorts Binance's equity perpetual futures against them to cancel out price risk. This allows Ethena to generate yield from tokenized stocks, rather than just crypto prices.

Ethena is betting that spreading its funding sources across two different asset classes makes the whole structure more resilient. However, this new model also adds counterparty risks and market volatility, which could be a concern for some investors.