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Ethereum Stablecoin Developer Ethena Surpasses Epic Milestone

Mon, 07/17/2023 - 15:45
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Gamza Khanzadaev
Arthur Hayes-backed start-up attracts millions of dollars for next-gen Ethereum stablecoin
Ethereum Stablecoin Developer Ethena Surpasses Epic Milestone
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Ethena, a crypto start-up, has achieved a significant milestone by securing an impressive $6 million in seed funding, according to a report from Axios. The funding round, led by prominent investment firm Dragonfly, demonstrates growing interest in Ethena's cutting-edge stablecoin project.

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Thus, in response to the challenges faced by previous stablecoin ventures, the start-up has developed a unique approach to ensuring its stablecoin, known as USDe, maintains a stable value relative to the U.S. dollar. By employing Ethereum derivatives and a hedging mechanism, Ethena aims to ensure that the value of USDe remains pegged to the dollar.

The difference

The key to this solution lies in the innovative use of collateral from users, allowing the platform to effectively hedge price exposure through shorting Ethereum via perpetual swaps. Through a balanced combination of staked ETH and derivatives, Ethena aims to neutralize any potential gains or losses, safeguarding the stability of USDe.

The start-up wants to distinguish itself from previous attempts at algorithmic stablecoins, such as the infamous Terra Luna. Moreover, Ethena's approach sets it apart from current stablecoin leaders USDC and USDT, which predominantly rely on traditional fiat-based assets like bills and bonds.

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The success of Ethena's funding round is further amplified by the support it has garnered from prominent players in the cryptocurrency industry. Notable investors include big crypto exchanges and, additionally, Arthur Hayes. The founder of BitMEX and his family office have provided crucial backing to the project. This is especially noteworthy since Hayes himself has advocated for the development of an algorithmic stablecoin backed by Bitcoin derivatives, known as NakaDollar.

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About the author

Financial analyst, trader and crypto enthusiast.

Gamza graduated with a degree in finance and credit with a specialization in securities and financial derivatives. He then also completed a master's program in banking and asset management.

He wants to have a hand in covering economic and fintech topics, as well as educate more people about cryptocurrencies and blockchain.