Ethena Proposes Solana as Reserve Asset for USDe

Developing Reserve Structure with Solana

The new proposal aims to incorporate Solana as a reserve asset to enhance the protection of USDe. This approach resembles the hedging strategies previously employed by Ethena for Bitcoin (BTC) and Ethereum (ETH). The primary goals of the proposal are:

• Diversifying the collateral backing USDe
• Enhancing its utilization in the DeFi space
• Providing greater overall market liquidity

In addition to SOL, the Ethena community has recommended using Binance Liquid Staked SOL (BNSOL) and Bybit Liquid Staked SOL (bbSOL) as reserves for USDe. This strategy will strengthen the support structure for the synthetic dollar while enhancing liquidity and market efficiency.

Impact of the Proposal on Altcoin Prices

Ethena launched the USDe stablecoin on the Solana blockchain in August of this year using LayerZero’s OFT standard. The Ethena Foundation has indicated that a careful scaling process will be implemented regarding the use of SOL as a reserve, taking into account various risks, such as:

• Limited trading history of SOL perpetual futures
• Low liquidity
• Insufficient funding rate data

The announcement stated, “The proposed allocation will be implemented gradually and in a controlled manner following discussions with the Risk Committee.” This approach aims to ensure a safer transition process.

With the new reserve plan, Ethena seeks to boost protocol revenue and create an open trading capacity of $2-3 billion with Solana-backed positions. This increase will enable USDe to better respond to market demand beyond its current supply of $2.5 billion.

USDe: A Strong Contender in the Stablecoin Market

Following the launch of Ethena’s USDe stablecoin, it garnered significant interest, reaching a total supply of $2.5 billion. USDe is notable for being the first scalable and censorship-resistant stablecoin that maintains dollar stability using delta hedging derivative positions within the DeFi ecosystem.

Ethena is also expanding its ecosystem with the UStb stablecoin, launched in partnership with BlockRock and Securitize. This strategic move supports USDe’s positioning as a strong competitor in the stablecoin market.

Market Response and Future Potential

The ENA coin has positively responded to these developments, gaining 17% last week to reach $0.39, bringing its market value back above $1 billion. Technical analyses indicate that this altcoin could rise to price levels of $0.50 and $0.69, with potential further targets reaching $1.50.