- A new stablecoin supported by BlackRock’s BUIDL fun is being introduced by Ethena.
- The USDtb coin is a component of the project’s endeavor to broaden its range of products.
On Monday, the synthetic dollar blockchain project Ethena announced the creation of a new stablecoin. The token, known as USDtb, will be supported by BlackRock’s BUIDL fund, which is managed with well over half a billion dollars’ worth of primarily U.S. Treasury notes.
This is a significant shift for Ethena, which first gained traction in the synthetic dollar market with its USDe token, which was experimental and based on a trading strategy based on derivatives and tied to the US dollar.
With a dollar peg backed by reserve assets equivalent to the $USD value of each USDtb issued, USDtb offers a completely different risk profile from USDe, Ethena’s primary synthetic dollar offering.
To put it another way, USDtb will operate considerably more like conventional stablecoins like USDC and USDT, which maintain a dollar or its equivalent in reserve for each stablecoin that is issued. This ensures that the tokens may always be exchanged for cash.
The Function of BUIDL at BlackRock
A news statement states that BUIDL will make up more than 90% of USDtb’s total reserves, which is the largest BUIDL allocation of any stablecoin issuer. In order to ease redemptions or institutional-grade, regulated tokenized U.S. Treasury assets, the remaining 10% will be stored in stablecoins.
Additionally, Securitize, the company that issues the BlackRock USD Institutional Digital Liquidity Fund, will collaborate with USDtb to launch the product.
A share in a tokenized fund that predominantly invests in short-term U.S. government debt, cash, and repos is represented by BlackRock’s BUIDL token. Trading on Aptos, Arbitrum, Avalanche, Ethereum, Optimism, and Polygon, it is the biggest tokenized fund of its kind.
Ethena intends to use BUIDL in order to maintain USDtb’s complete independence and bankruptcy distance from other commercial interests. This is due to the fact that USDe, its main coin, is dependent on market fluctuations.
What separates USDe from USDtb
The “delta-neutral” approach used by USDe takes use of the price differential between the spot and futures markets for an asset. In an attempt to maintain USDe’s 1:1 peg to the dollar, it shorts ETH futures and buys spot stETH when prices climb.
Along with stablecoins like USDC and USDT, USDe is also supported by free-floating assets like BTC, ETH, and SOL. The addition of USDtb as a suitable asset for this Reserve Fund was approved by the Ethena Risk Committee last week.
Since Ethena intends to use the stablecoin as a haven when its cash-and-carry trade breaks down, such as when financing rates become negative, USDtb will in a way play a unique role as a USDe reserve asset.
The hedges would be closed, and USDtb would be used in place of Bitcoin or whatever. Because the USDtb part is not subject to negative financing rates, it lowers the risk profile for USDe.
In addition to being a distinct product with a distinct profile, it was partially developed or proposed for that reason. With a total locked value of more than $5 billion, USDe is the third-largest and fastest-growing cryptocurrency asset denominated in USD.
We recognized a clear potential to offer a new product that gives customers a completely different risk profile from USDe without requiring them to leave our reliable environment, given the quickly increasing demand for alternative stablecoin options.
A contender for the Grand Prix
Only whitelisted individuals are able to mint USDtb, just like other regulated stablecoins. All USDtb reserve assets would be lawfully owned and managed by Pallas, a BVI-based business, which also includes passing AML checks and other screening procedures.
According to Rosenberg, the Pallas Fund’s investment manager is an Ethena subsidiary, while Ethena Labs provides services to Pallas. Pallas does not, however, sell any other goods.
Coinbase Institutional, Komainu, Zodia Custody, and Copper serve as custodians for USDtb. With no high- or medium-level results, Ethena submitted the protocol to three comprehensive security evaluations conducted by auditors Pashov, Quantstamp, and Cyfrin in October.
Ethena and Securitize submitted USDtb for Spark’s Tokenization Grand Prix last week. Selected onboarding partners will get up to $1 billion in liquidity. In order to facilitate the management of allocations between these assets in reaction to interest rate fluctuations, the plan would incorporate a facility to trade USDtb and USDe, which currently generate around $120 million in revenue annually for the Sky (née MakerDAO) ecosystem.
This might greatly improve USDtb’s liquidity and usefulness if chosen.
Disclaimer : This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.
