USDe Stablecoin Sees 25,645% Growth on Coinbase's Layer 2 Network

USDe, a synthetic dollar developed by Ethena, has experienced a remarkable surge of 25,645% over the past 90 days, reaching a market capitalization of $337 million on Coinbase's Layer 2 network, known as Base. This growth positions USDe as the second-largest stablecoin on the platform, following USDC, which holds approximately 85% of the stablecoin market share on Base.

The total global supply of USDe is around $4.08 billion, distributed across 21 different blockchain networks, with 8.27% of that supply now residing on Base. In the last month alone, USDe has seen net inflows of $67 million, indicating a steady increase in user adoption rather than a single large investment.

USDe operates differently from traditional stablecoins like USDC and USDT, which are backed by reserves of fiat currency. Instead, USDe employs a delta-neutral hedging strategy, holding spot crypto assets such as Bitcoin and Ethereum while simultaneously taking short positions in perpetual futures contracts. This approach aims to maintain a dollar-neutral position regardless of market fluctuations, allowing Ethena to pass yields to USDe holders through its staked version, sUSDe.

The partnership between Ethena Labs and Coinbase has facilitated the growth of USDe, particularly through integrations with lending protocols like Morpho on Base. However, despite its rapid ascent, USDe's market presence remains significantly smaller than USDC's, which has a market cap of approximately $4.25 billion on the same network. Potential risks include the impact of negative funding rates and counterparty risks associated with the exchanges where Ethena holds its futures positions.

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Source: KLEA News