Ethena to Launch Stablecoin Backed by BlackRock’s Tokenized BUIDL Fund

• Ethena’s UStb will be backed by BlackRock’s BUIDL, offering a safer reserve base.
• UStb aims to stabilize USDe by reallocating assets during market instability.
• Ethena secures $14M in funding to expand with UStb and strengthen market position.

Ethena is preparing to launch a new stablecoin called UStb with Securitize, a real-world asset tokenization platform. Unlike its synthetic dollar stablecoin, USDe, UStb will be backed by BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL).

The BUIDL fund, tokenized on Ethereum, mainly invests in U.S. dollars, short-term Treasury bills, and repurchase agreements. This backing gives UStb a strong reserve base, setting it apart from other stablecoins.

The stablecoin market has grown rapidly, with BUIDL managing over $522 million since its March 2024 launch. UStb’s introduction could be a major step forward in the tokenized government securities space, which holds over $2 billion in assets.

A New Approach to Stability

Unlike Ethena’s USDe, which relies on a complex derivative hedging strategy, UStb will have a more traditional backing. USDe, launched in February, became the fifth-largest stablecoin by market cap. 

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However, it carries risks due to its reliance on cryptocurrency collateral and exposure to derivatives markets. These risks include volatility in the underlying assets, as well as potential counterparty risks with exchanges. 

Ethena’s team acknowledges these challenges, especially after USDe briefly lost its peg during a crypto market selloff in August. By launching UStb, Ethena aims to mitigate some of these risks while offering a stable alternative for investors.

UStb to Support USDe in Volatile Markets

Ethena plans to use UStb to reinforce USDe during periods of market instability. According to Ethena’s governance framework, the backing assets of USDe could be reallocated to UStb if needed, especially during times of negative funding rates. 

This dual stablecoin model provides more flexibility, allowing Ethena to adapt to varying market conditions. Additionally, UStb will serve as an alternative form of margin collateral on centralized exchanges like Bybit and Bitget. This feature broadens UStb’s utility, making it an attractive option for traders and investors looking for stability in volatile markets.

Strategic Growth and Future Plans

Ethena’s strategic growth is supported by a $14 million funding round, which valued the company at $300 million. Dragonfly and BitMEX founder Arthur Hayes’ family office, Maelstrom, co-led the round.

Read also: Market Analysis: Ethena’s Price Volatility and Potential Rebound

With this financial backing, Ethena is in a good position to launch UStb and expand in the tokenized asset space. The collaboration with Securitize, which manages over $950 million in tokenized investments, further strengthens Ethena’s ability to deliver innovative solutions in digital finance.