USDe Soars with $500 Million Market Cap, Hits 44% Staked Ratio

Ethena Lab’s stablecoin USDe has surged to a market capitalization of half a billion dollars, as nearly half of the tokens are committed to staking, enhancing the project’s resilience.

Amidst the cryptocurrency bull run, Bitcoin, with a market cap of $62,000, has surged by almost 40% over the last month. Similarly, Ethereum, valued at $3,402, has experienced a 47% increase during the same period.

USDe Experiences Huge Growth in Market Cap

In a post on X (formerly Twitter), on-chain data researcher Tom Wan informed his 9,585 followers that USDe has reached a $500 million market cap. He also highlighted the substantial yield returns available for investors who lock up their tokens in the project, thus increasing liquidity.

“With the crazy funding % on perps, 39% on average, Ethena is paying out a 24% yield on sUSDe.”

Moreover, Wan presented a graph illustrating the rapid growth in the USDe market cap since late November 2023, with the staked tokens gradually stabilizing around the 44% mark.

Ethena Labs USDe Market Cap v Staked Ratio. Source: X/Tom Wan

However, Wan elaborated that the reserve for the insurance fund would undergo a tenfold increase, causing confusion among other X users on social media.

“Good news is they are able to also increase the reserve for the insurance fund from $1M to $10M.”

Meanwhile, one X user asked if the insurance fund was enough “assuming a 30% daily drawdown.”

Wan clarified that the staking yield would decrease proportionately in response to the funding rate.

“The staking yield will drop accordingly based on the funding rate. The insurance fund tries to mitigate funding risk and will be triggered when funding rates go negative and larger than stETH yield.”

After a Long-Term Decline, Stablecoins Stage a Resurgence

Meanwhile, it was only a few months ago that the stablecoin market took a huge plunge.

In October 2023, BeInCrypto reported that stablecoins endured an 18-month-long decline. Their market cap has shrunk by 35% since May 2022.

However, many anticipate that stablecoin regulations will come into effect this year in the United States.

On January 15, Circle chief executive Jeremy Allaire said there was a “very good chance” that stablecoin regulations would be passed in the US in 2024.