Ethena Labs jumps 14% on BlackRock’s BUIDL backed UStb stablecoin announcement

Ethena Labs has announced the introduction of UStb, a new stablecoin fully backed by BlackRock’s on-chain BUIDL fund , developed in partnership with Securitize. This product is an additional fiat stablecoin alongside USDe, offering a differentiated risk profile to users and exchange partners.

UStb will reportedly function identically to traditional stablecoins and exist as an isolated product distinct from USDe. BlackRock and Securitize’s collateralization aims to provide stability and trust in the asset’s backing, appealing to users seeking alternatives within the stablecoin market.

One concern regarding USDe has been its response to negative funding rate environments. Despite six months of bearish conditions, Ethena’s sUSDe has not yet experienced a negative funding rate. However, the protocol has mechanisms to adjust its backing composition dynamically between basis positions and liquid stable products in varying interest rate environments.

Interaction between USDe and UStb stablecoins

USDe will now reportedly benefit from incorporating UStb during weak funding conditions. If governance deems it necessary, Ethena can close hedging positions and reallocate backing assets to UStb to mitigate risks associated with negative funding rates. This flexibility enhances the protocol’s resilience and adaptability in fluctuating market conditions.

As Ethena expands into centralized exchange collateral offerings beyond its current integrations with Bybit and Bitget, it plans to offer exchange partners the choice between two distinct products for margin collateral. The introduction of UStb provides additional options for exchanges and users, potentially broadening the adoption of Ethena’s stablecoin solutions.

Further updates on UStb’s timelines and new exchange integrations are expected to be shared soon. The forthcoming details will outline how UStb will be integrated into additional platforms, enhancing its accessibility and utility within the crypto ecosystem.

Ethena Labs claims a desire to continue to innovate in DeFi, aiming to transform Ethereum into a crypto-native yield-bearing stablecoin that operates independently of the traditional banking system. The company’s approach involves leveraging delta-neutral strategies, on-chain custody, and derivatives to manage volatility and improve scalability and stability.

Ethena’s USDe is a synthetic dollar fully backed and transparently recorded on-chain, allowing seamless integration throughout the DeFi ecosystem. It surpassed $3b in market cap in June but has since retraced slightly to $2.5 billion. The introduction of UStb plans to complement USDe by providing an alternative stablecoin option that is particularly useful in varying market conditions.

Following the announcement of UStb, Ethena Labs’ ENA governance token experienced a notable surge over the past 24 hours. The token’s price increased by approximately 14%, climbing from a low of $0.307 to a high of $0.378. Trading volume also saw a significant uptick, reaching around $196.1 million.