Ethena Labs Integrates Solana, Partially Backs USDe with SOL

Synthetic stablecoin startup Ethena Labs is broadening its reach in the crypto industry by integrating Solana and partially backing its flagship ‘synthetic dollar’ USDe with SOL.

Crypto synthetic stablecoin startup Ethena Labs is expanding its presence in the digital currency space by integrating Solana and partially backing its flagship ‘synthetic dollar’ USDe with SOL.

The integration is being enabled by the cross-chain interoperability protocol LayerZero.

Solana users will now be able to buy, send, and receive USDe on Solana and potentially earn rewards via sUSDe, the staked version of the token. Ethena Labs has also added SOL as an asset to back USDe, joining Bitcoin, which was added as a collateral asset in early April.

USDe holders on Solana will also be able to earn Ethena sats by staking USDe on Kamino, Orca, and Drift.

“Considering Solana’s position as the third largest blockchain by TVL, Ethena is optimistic that this integration will notably increase the adoption of USDe and sUSDe – offering an entire new market of traders a reward-accruing asset in sUSDe that significantly improves upon the traditional stablecoin experience,” a press release shared with The Defiant reads.

Solana integration may help stem Ethena’s falling market cap

The move to integrate Solana may be a way for Ethena to counter the project’s decreasing market capitalization.

According to CoinGecko, USDe’s market cap has fallen by 14% to $3.1 billion, down from $3.6 billion in early July. This still places the stablecoin in fourth position among stablecoins, behind USDT, USDC, and DAI.

ENA, the project’s native token which launched in April at a $1 billion market cap with an airdrop for early adopters, is now at half that size, four months later. It trades at $0.27, having lost 33% of its value over the past 30 days, according to CoinGecko.

Ethena Labs made headlines when it launched its synthetic dollar, USDe, due to its high yield and novel mechanism to defend the token’s peg.

USDe mainly backs its token (which is pegged to $1) with staked Ethereum, while also hedging its stETH holdings with short ETH positions on centralized exchanges. Both stETH and the short positions contribute to yield that’s passed on to USDe stakers.

The model has been praised by many in the crypto community—while also causing LUNA PTSD for its double-digit yield.