In a post on X, one of the analysts now Claims Traditional fiat-backed stablecoins such as USDT and USDC should prepare for a “major” attack given the growing popularity of Ethena’s USDe coin. This warning comes after Ethena and USDe integrated with Bybit, a cryptocurrency exchange that allows perpetual trading.
Athena cooperates with ByBit
USDe is not backed by fiat currencies like other popular stablecoins. Instead, it is a “synthetic dollar” backed by various assets, primarily staked ETH derivatives and short positions posted on centralized exchanges like Binance.
Related reading: Bitcoin poised to rise as major indices decline, market expert says
Announcement partnershipUSDe issuer Ethena took to X to celebrate the deal and its potential to change the cryptocurrency trading landscape. The platform said traders can earn a return on the US dollar, which can be used as collateral to trade futures.
Additionally, Ethena noted that users can use their stablecoins in spot trading pairs such as Bitcoin and Ethereum without paying fees.
Will this reduce USDT's dominance?
However, while the partnership is bullish for ENA, the native token of the Ethena platform, and could increase demand for USDe, one analyst is skeptical. The deal constitutes a “direct” attack on the most dominant stablecoins, USDT and USDC, which are widely used by traders on almost all cryptocurrency permanent trading platforms, the observer said.
The analyst pointed to Ethena's dangling offers through Bybit integration that could lure traders away from USDT and USDC. First, traders who earn nothing when they trade consistently will receive a return.
This return will in turn be used to eliminate financing fees if they choose USDe instead of USDT or USDC as their margin. Given the high double-digit yield currently at 15%, the decision to distribute “free money” to hold USD, as expected, will impact the dominance of USDT and USDC.
However, there are questions about the high returns, with some saying the model is not sustainable. Critics add that the $10 million reserve fund put in place as a safety net will not be enough to prevent disengagement when returns decline.
Currently, USDT is the third most valuable cryptocurrency after Bitcoin and Ethereum. At time of writing, its market capitalization was more than $111 billion. With the adoption of cryptocurrencies and prices rebounding from the recent decline, the stablecoin is likely to strengthen its position on the leaderboard.
USDe, on the other hand, has a TVL value of over $2.5 billion. From the Athena home page, there are over 175,000 holders.
Featured image from Canva, chart from TradingView