As a seasoned researcher who has been closely following the cryptocurrency market for over a decade, I find the partnership between Ethena Labs and BlackRock on their new stablecoin project truly intriguing. The involvement of a financial titan like BlackRock, with its vast experience in traditional finance, is a significant step forward in bridging the gap between traditional finance and blockchain technology.
Ethena Labs is initiating a fresh stablecoin venture, which will be supported entirely by BlackRock’s Ethereum-backed tokenized investment fund and Securitize. In simpler terms, the new stablecoin project is being introduced in partnership with BlackRock’s Ethereum-based tokenized fund and Securitize.
Ethena (ENA) revealed their UStb fiat stablecoin product, backed by the BlackRock USD Institutional Digital Liquidity Fund (BUIDL) and private market lender Securitize. UStb functions similarly to a conventional stablecoin, with BlackRock and Securitize overseeing the collateral for this new offering that’s pegged to the US dollar.
In simple terms, Ethena revealed on September 26th that the need to address community worries regarding their current stablecoin, Ethena USDE, was a significant factor in developing UStb, which is supported by BlackRock.
Discussions arose about how USDe could handle scenarios where funding rates turn negative. Individuals such as Andre Cronje, the creator of Fantom, expressed worries about potential systemic issues, drawing comparisons between the asset and the collapsed TerraUSD.
In more than half a year of USDe trading, Ethena observed that the fears expressed didn’t come true, even with unfavorable market conditions usually leading to negative funding. The introduction of UStb offers an additional layer of protection against potential risks if funding rates were to significantly drop, as suggested in their statement on X.
In unfavorable funding situations, Ethena may choose to liquidate its hedging positions and instead invest the related assets in UStb. This move is aimed at reducing risks connected to adverse funding rate conditions.
Ethena Labs
We’re thrilled to unveil Ethena’s latest addition to our product line: UStb! This new offering will be fortified by @Blackrock BUIDL in collaboration with @Securitize, creating a distinct fiat stablecoin product alongside USDe. Here’s why this partnership matters:
— Ethena Labs (@ethena_labs) September 26, 2024
One of the initial stablecoin ventures that BlackRock has collaborated with is Ethna’s UStb project. BlackRock’s BUIDL functions as the biggest tokenized treasury fund available on any blockchain, which operates on the Ethereum (ETH) network.
As reported by DefiLlama, the total value locked (TVL) in crypto terms for BUIDL amounts to more than $522 million.
BlackRock could potentially venture into markets of tokens pegged to traditional currencies, given their increasing integration of cryptocurrency investment options. With a massive portfolio valued at $10 trillion, this financial titan is also offering direct exchange-traded funds for Bitcoin (BTC) and Ether.
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2024-09-26 18:14