Synthetic Dollar Protocol Ethena Expands to Solana, Includes SOL as Backing Asset

The integration aims to increase the adoption of Ethena’s cryptocurrencies: USDe and sUSDe.

Ethena Labs, developers of the synthetic dollar protocol Ethena, announced the rollout of Ethena to Solana on Wednesday, an effort to increase the scalability and durability of Ethena’s flagship token: USDe. 

According to a statement shared with Unchained, users on Solana can transact in USDe, a cryptocurrency aimed at staying pegged to $1, and stake USDe to accrue a yield. At presstime, Ethena offered an annual percentage yield of 12.3% to wallet addresses that stake their USDe by earning funding rates from open short derivative positions as well as receiving rewards from securing the Ethereum blockchain. 

Ethena’s arrival on Solana also entails Ethena Labs using SOL to back its USDe. SOL as a backing asset to USDE joins the likes of other cryptocurrencies, namely ETH, BTC, stablecoin holdings, and ETH-based liquid staking tokens such as Lido’s stETH.

Data from DefiLlama shows Ethena is the eighth-largest DeFi protocol by total value locked, behind decentralized exchange Uniswap and restaking project EtherFi.

Read More: Decentralized Exchanges, Led by Uniswap, Post Their Third-Largest Day of Trading Volume

“In addition to increasing the strength and security of USDe’s backing, this will unlock $2 billion to $3 billion in additional open interest in the SOL futures market – allowing USDe to continue scaling from its current supply of approximately $3.2 billion and keep pace with increasing market demand,” the statement said.

The announcement comes roughly four months after Ethena Labs added BTC, the largest cryptocurrency by market cap, as a backing asset, which helped boost the supply of USDe by about $1.2 billion. 

While ENA, the governance token for Ethena, has increased 1.8% in the past hour to trade at 28 cents, the token has slumped 31.5% in the past seven days, giving it a market cap of $506.2 million, per CoinGecko.