Decentralized finance (DeFi) protocol Ethena’s stablecoin, USDe, has surpassed Sky’s Dai (DAI) in total market capitalization, becoming the third-largest stablecoin after Tether’s USDt (USDT) and USD Coin (USDC), according to data from DefiLlama.
At less than $6 billion in market capitalizatioin, USDe still greatly lags USDt and USDC, which tout market caps of approximately $140 billion and $40 billion, respectively.
Meanwhile, the market capitalization of DAI — the flagship stablecoin of Sky (formerly Maker) — has dwindled to around $4.5 billion from upward of $7 billion in 2022, according to DefiLlama. The total market cap of all stablecoins is just over $200 billion.
Source: DefiLlama
Related: Wintermute to take Ethena’s USDe as trading margin
CeDeFi yield
Launched in February, USDe bootstrapped billions of dollars from stablecoin holders pursuing double-digit APRs from Ethena’s CeDeFi yield strategy, which combines DeFi smart contracts and offchain derivatives trading.
CeDeFi refers to any strategy combining elements of DeFi and trading on centralized exchanges (CEXs).
“Since February 2024, sUSDe holders have enjoyed an average APY of 17.5%, peaking at 55.9% (March 7, 2024) and bottoming at 4.3% (August 8, 2024),” cryptocurrency researcher Messari said in a Dec. 12 note.
As of Dec. 12, staked USDe, or sUSDe, is yielding approximately 24% annual percentage returns, according to DefiLlama.
Ethena lets users mint USDe against tokens such as Bitcoin (BTC), Ether (ETH), liquid staking tokens (LSTs) and other stablecoins. It then hedges against the portfolio’s inherent volatility using offchain financial derivatives.
“Ethena harnesses yield from staked assets (think Lido’s stETH), plus the funding and basis spread from perpetuals and futures markets, passing these gains on to sUSDe holders,” Messari said.
However, Ethena’s CeDeFi trading strategy poses risks, including failures by offchain exchanges, custodians and settlement providers, Messari noted.
Source: DefiLlama
Rapid adoption
Nonetheless, USDe has seen rapid adoption. In October, cryptocurrency trading desk Wintermute began accepting USDe as trading collateral.
In June, sUSDe integrated with DeFi lending giant Aave. It is now the fastest-growing asset on the platform, Messari said.
Messari added that in 2024, Ethena generated approximately $200 million in fees. On Nov. 15, Ethena Foundation agreed to share a portion of those earnings with tokenholders.
Ethena’s native token, ENA (ENA), has gained by roughly 5x since June, according to CoinGecko.
In August, Maker rebranded as Sky. It also implemented changes to Dai, including renaming the decentralized stablecoin USDS. The revamp has drawn criticism, including for alleged cybersecurity risks and potential asset freezes.
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