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USDe by Ethena Becomes the Third Largest Stablecoin by Market Cap
The yield-bearing stablecoin USDe, issued by Ethena Labs, has surpassed FDUSD to become the third largest dollar-pegged token. A 75% increase in market capitalization since mid-July has brought the circulating supply to $9.3 billion, according to The Block's dashboard data.
The Block analyst Brandon Kay believes that demand for USDe may have accelerated following President Donald Trump’s signing of the GENIUS Act — the first comprehensive U.S. legislation on dollar-backed stablecoins. Ethena’s subsequent custodial partnership with Anchorage Digital to issue a synthetic dollar compliant with GENIUS in the U.S. market may have further driven supply growth.
USDe offers holders a floating annual yield between 10% and 19%, combining staking rewards and funding rates. This appeals to investors seeking higher returns, especially as U.S. Treasury yields remain less attractive.
Currently, only Tether (USDT) with a $164 billion market cap and Circle's USDC at $63 billion have higher valuations than USDe.
Ethena launched USDe in early 2024, and its mechanism differs from the failed algorithmic model of UST. UST was not fully collateralized and relied on demand-supply algorithms, while USDe is fully backed by crypto assets and hedged positions. Additionally, Ethena has since partnered with exchanges to boost liquidity and diversified its collateral with assets like Bitcoin and major stablecoins, including USDT.
The rise in USDe's market cap, which began around July 16–17, also coincides with a surge in Ethena’s total value locked (TVL). According to DeFiLlama, Ethena currently ranks seventh in decentralized finance, with around $9.4 billion locked in its contracts.
See also: "Litecoin Rises 10% in Bullish Rally"
