Ethena Labs proposes decentralized exchange to boost synthetic dollar USDe Ethena Labs proposes decentralized exchange to boost synthetic dollar USDe
Ethena's Ethereal will match a CEX speed with DeFi perks and further bolster USDe adoption.
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Updated: Sep. 30, 2024 at 12:03 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
Ethena Labs, the developer of the “synthetic dollar” USDe, revealed that the community is reviewing a proposal to launch a decentralized crypto exchange to drive the asset’s growth.
Ethereal
On Sept. 30, Ethena community member Fells0x proposed the launch of “Ethereal,” a decentralized exchange (DEX) on the Ethena network.
According to the proposal, Ethereal V1 would be integrated into Ethena’s reserve management system to enhance the utility and demand of its synthetic dollar, USDe.
The proposal outlines that Ethereal would manage the spot and perpetual futures positions supporting USDe. Over time, this is expected to strengthen USDe’s utility and increase demand.
The proposal would allocate 15% of any future Ethereal governance tokens to Ethena community members if approved.
The first version of Ethereal would be expected to launch on the testnet in Q4 2024. The DEX aims to deliver the speed and performance of centralized exchanges while ensuring users maintain full self-custody of their assets.
The proposal stated:
“Ethereal is designed to match centralized exchange performance while maintaining complete self-custody and flexibility to support features such as cross-margin, liquidity automation, and portfolio margin.”
Upon launch, the DEX is projected to be capable of handling up to 1 million transactions per second with sub-20ms latency.
Additionally, Ethereal plans to enable the development of more applications using USDe, unlocking key DEX functionalities. These would include decentralized lending and borrowing using USDe.
Ethena Labs has announced that a snapshot vote on the proposal will occur later today.
Declining USDe supply
This initiative comes as USDe faces increased competition in the crypto market, which is reducing its supply.
Earlier this year, USDe was among the fastest-growing stablecoins, drawing investors with its innovative mechanisms and high-yield potential.
However, USDe’s market cap has dropped by over $1 billion in the last three months to $2.54 billion, down from $3.61 billion. Notably, the Ethena protocol’s governance token ENA has also seen its value fall 85% from its April high.
Observers have linked the fall to increased competition among yield-generating stablecoins. For example, PayPal’s PYUSD has gained traction on Solana because it offers users high returns. At the same time, firms like DWF Labs and BitGo have also revealed intentions to enter the market with their own stablecoin product.
Nevertheless, despite the substantial withdrawals and current market conditions, USDe has maintained its peg to the dollar.
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Oluwapelumi Adejumo
Oluwapelumi values Bitcoin's potential. He imparts insights on a range of topics like DeFi, hacks, mining and culture, underlining transformative power.
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Bitcoin, a decentralized currency that defies the sway of central banks or administrators, transacts electronically, circumventing intermediaries via a peer-to-peer network.
Solana
$225.468
Solana is a high-performance blockchain platform that utilizes a unique consensus algorithm called “Proof of History” to achieve fast transaction speeds and low fees.
Ethena USDe
$1.00100
Ethena is a synthetic dollar protocol built on Ethereum that will provide a crypto-native solution for money not reliant on traditional banking system infrastructure, alongside a globally accessible dollar denominated savings instrument – the ‘Internet Bond’.
PayPal
PayPal is an American multinational financial technology firm that operates an online payment system in most countries that permits online money transfers and serves as an electronic replacement for conventional paper methods like checks and money orders.
BitGo
BitGo is a market leader in institutional-grade cryptocurrency investment services, providing institutional investors with security, compliance, and custodial solutions for blockchain-based currencies.
Ethena Labs
Ethena Labs is a decentralized protocol built on Ethereum, offering a synthetic dollar (USDe) that functions independently of traditional banking infrastructure.