Algorithmic stablecoins gain trust as Ethena's TVL surpasses $3 billion milestone

Ethena's USDe Stablecoin Achieves Milestones in Revenue and Market Cap

Ethena, a pioneering decentralised finance (DeFi) platform, has made significant strides in the cryptocurrency market. The platform's USDe stablecoin, which targets delta neutrality through a unique risk management mechanism, has been garnering attention.

Ethena's innovative approach to stablecoin management involves a mechanism called delta hedging. This mechanism covers the collateral's price change risk using short futures positions on derivatives platforms. The specific assets backing the collateral, however, were not detailed in the provided information.

The USDe stablecoin has been making waves in the market. On June 2, Ethena's total value locked (TVL) surpassed $3 billion, marking a significant milestone. The platform also hit a weekly record when revenue figures surpassed $8.3 million. This impressive performance continued, with the third-best revenue week from May 27 to June 2, generating over $7 million.

Token Terminal, a reputable source in the crypto industry, predicts that Ethena is on track to generate over $220 million in revenue over the next 12 months. This prediction places Ethena's USDe stablecoin as the fourth-largest stablecoin by market cap, surpassing Solana in 7-day revenue, and occupying third place after Tron and Ethereum.

The USDe token is fully backed by the USD based on an on-chain mechanism. Ethena's governance token, ENA, is currently trading at $0.97 and has a market cap of $1.47 billion.

Interestingly, the ENA token was launched by the Ethena protocol itself, although the specific individual or entity who launched it on June 2, 2023, is not explicitly stated in the search results. Mega Matrix, a holding company, has shown strong interest in accumulating ENA tokens for its stablecoin governance treasury strategy.

Ethena's risk management strategy is designed to maintain a balanced reserve to back the stablecoin. If the BTC price declines, the short positions become profitable, ensuring the stability of the USDe stablecoin. Ethena uses short positions against BTC derivatives on futures trading platforms like Binance, BitMex, or Deribit to adjust the delta position.

These achievements and strategies position Ethena as a promising player in the DeFi landscape, demonstrating the potential of innovative risk management mechanisms in the stablecoin sector.