Ethena Raises $100M to Develop Synthetic Stablecoin Targeting TradFi Institutions

Known as a synthetic stablecoin, USDe differs from other tokens in that it is not backed 1:1 by fiat assets.

Ethena, the company behind the synthetic stablecoin USDe, has reportedly raised $100 million to launch a new stablecoin targeting traditional financial institutions.

The funding round, which was completed in December, saw participation from Franklin Templeton and Fidelity Investments, among others, according to a Bloomberg report on Monday, citing a person familiar with the matter.

In a blog post in January, Ethena founder Guy Young announced plans to introduce iUSDe, a stablecoin designed for use by regulated financial institutions.

"This token will be fully compliant with all applicable regulations and will be designed to meet the specific needs of TradFi institutions," Young said at the time.

Unlike fiat-backed stablecoins, USDe is synthetically pegged by over-collateralizing stablecoins and taking futures positions with large open interest in a bid to maintain its 1:1 peg to the dollar.

The stablecoin's market cap surged to about $6 billion this month, making it the third-largest stablecoin after Tether's USDT and Circle's USDC, which are valued at $142 billion and $57 billion, respectively.

Some market observers have touted USDe as a potential safe haven during periods of heightened volatility in the broader crypto market. Arthur Hayes, chief investment officer of Maelstrom, recently disclosed that the digital asset fund has raised its exposure to USDe "to record levels."

"We will be positioned with copious amounts of dry powder ready to buy the dip on Bitcoin,” said Hayes, who is also an investor in and an advisor to Ethena, in a blog post on Friday.

Ethena did not immediately respond to CoinDesk's request for comment on the $100 million funding round.