Ethena Labs Proposes Adding SOL to USDe's Collateral Mix

If the proposal is approved, SOL will join BTC and ETH within Ethena's collateral mix.

Ethena Labs, the entity behind the development and maintenance of USDe, has put forth a proposal to integrate Solana (SOL) into the synthetic stablecoin’s treasury collateral mix.

Unlike stablecoins such as Tether (USDT) or Circle (USDC), which are fully backed by fiat assets at a 1:1 ratio, USDe is a synthetic stablecoin. The stablecoin maintains its $1 peg by using stablecoin collateral and a hedged cash-and-carry trade, which involves taking futures positions with large open interest available to stabilize value, supported by a reserve fund to navigate risk in fluctuating market conditions.

If approved by Ethena’s Risk Committee, which operates independently of Ethena Labs, SOL will be gradually integrated as a collateral asset for USDe, with an initial allocation target of $100-200 million in SOL positions. This initial allocation would represent roughly 5-10% of SOL’s open interest, which is comparable to Ethena’s 3% stake in Bitcoin’s global open interest and 9% stake in ETH.

The proposal also suggests utilizing liquid staking tokens (LSTs) such as BNSOL and bbSOL, in a manner similar to Ethena’s use of ETH LSTs, which currently constitute one-third of its ETH allocation.

Recently, Ethena announced the allocation of $46 million from its USDe reserve fund to tokenized real-world asset investments in BlackRock’s BUIDL, Mountain’s USDM, Superstate’s USTB, and Sky’s USDS, reflecting DeFi’s shift towards generating yield from asset-backed tokens.