USDe Maintains Stability Despite Ongoing Trade War Turmoil

USDe Remains Resilient Amid Market Chaos, Hits $6B in Market Cap

Despite the market upheaval triggered by the White House’s renewed trade war threats, Ethena’s synthetic stablecoin, USDe, has shown remarkable stability, maintaining its $1 peg while witnessing steady growth.

Unlike traditional stablecoins like USDC, USDe isn’t backed by fiat assets on a 1:1 basis. Instead, it relies on a strategy that includes collateralizing stablecoins and leveraging a hedged cash-and-carry approach with futures positions to keep its value steady.

Throughout Monday’s trading session, USDe successfully held its $1 peg, briefly dipping to $0.999. CoinGecko data shows that USDe’s market capitalization has risen to over $6 billion, up from $5.7 billion just a week ago, indicating continued investor confidence despite the broader market turmoil.

Moreover, USDe’s positive funding rate, as revealed by on-chain data, is another crucial factor maintaining its peg. A positive funding rate suggests that long position holders are paying fees to those holding short positions, pointing to an optimistic outlook for USDe.

The stablecoin’s appeal is further boosted by its yield-bearing feature, offering an annual percentage yield (APY) of 10%. This yield has remained steady over the past 30 days, as per Dune Analytics, attracting investors in an environment where returns from other assets are volatile.

Concerns were previously raised about the sustainability of Ethena’s reserve fund for USDe, especially after CryptoQuant highlighted the risks of sustaining over $4 billion in reserves. However, the reserve fund has grown proportionally alongside USDe’s market cap, reaching $46.6 million by the end of Q4 2024.

As the crypto market grapples with instability, USDe’s consistent stability and attractive yield have made it a safe haven for many investors. Arthur Hayes, the chief investment officer of digital asset fund Maelstrom and co-founder of BitMEX, revealed that his firm has dramatically increased its exposure to USDe while taking profits from riskier altcoins.

“We’re positioning ourselves for future gains, holding ample dry powder to buy Bitcoin at a discount and continue to capitalize on select opportunities in the market,” Hayes shared, emphasizing his ongoing involvement with Ethena as an investor and advisor.