In a post on X, an analyst now complaints Traditional fiat-backed stablecoins like USDT and USDC are expected to prepare for a “major” attack due to the growing popularity of Ethena’s USDe. The warning follows the integration of Ethena and USDe with Bybit, a crypto exchange enabling perpetual trading.
Ethena partners with ByBit
USDe is not backed by fiat like other popular stablecoins. Rather, it is a “synthetic dollar” backed by various assets, primarily staked ETH derivatives and short positions posted on centralized exchanges like Binance.
Related reading: Market Expert Says Bitcoin Preparing to Rally as Major Indicators Cool Down
Announce it Partnership, Ethena, the issuer of USDe, visited X to celebrate the deal and its potential to transform the crypto trading scene. The platform said traders could earn a return on USDe, which can be used as collateral for futures trading.
Additionally, Ethena noted that users can use their stablecoin in spot trading pairs like Bitcoin and Ethereum without paying any fees.
Will this reduce USDT dominance?
However, while the partnership is bullish for ENA, the native token of the Ethena platform, and could boost demand for USDe, one analyst has doubts. The observer said the deal constitutes a “direct” attack on the most dominant stablecoins, USDT and USDC, which traders widely use on almost all crypto perpetual trading platforms.
The analyst pointed out that Ethena’s offerings through the Bybit integration could entice traders away from USDT and USDC. On the one hand, traders who earn nothing when trading continuously will receive a return.
This yield, in turn, will be used to waive funding fees if they choose USDe rather than USDT or USDC as margin. Given the high double-digit yield, currently at 15%, the decision to distribute “free money” to hold USDe, as planned, would impact the dominance of USDT and USDC.
Still, questions remain about the high returns, with some saying the model is unsustainable. Critics add that the $10 million reserve fund placed as a safety net will not be enough to prevent deindexation when yields fall.
Currently, USDT is the third most valuable cryptocurrency after Bitcoin and Ethereum. At the time of writing, its market capitalization stood at over $111 billion. As crypto adoption increases and prices recover from the recent plunge, the stablecoin will likely consolidate its position in the rankings.
On the other hand, USDe has a TVL of over $2.5 billion. On the Ethena homepage, there are over 175,000 holders.
Featured image from Canva, chart from TradingView
