The Ethena price rally is fueled by high demand for its USDe stablecoin, which has seen a 73% market cap increase in the past month.
Ethena’s native crypto ENA ENA $0.31 24h volatility: 0.4% Market cap: $1.66 B Vol. 24h: $215.19 M surged another 7% in the last 24 hours surging past $0.90 with its market cap hitting $2.66 billion. Also, the daily trading volume has surged by 55% shooting past $730 million, suggesting strong bullish momentum. The Ethena price rally comes as the demand for its USDe stablecoin skyrockets significantly.
Over the past week, the ENA price has gained nearly 40% while the monthly gains have extended to 160%. Supporting price movement is the strong Ethena whale activity with heavy ENA accumulation by BitMEX co-founder Arthur Hayes.
Ethena’s synthetic dollar USDe USDe $1.00 24h volatility: 0.0% Market cap: $5.25 B Vol. 24h: $135.26 M has emerged as the fastest-growing USD-pegged stablecoin with its market cap surging 73% in the last 30 days to $4.77 billion. This makes it the third-largest stablecoin in the market as of date, while overtaking DAI stablecoin which has a market cap of $4.71 billion. Commenting on the development, Ethena Labs co-founder and CEO Guy Young wrote:
“We are beginning to now see the effects as USDe blackholes every stablecoin in DeFi while warping lending markets to a new base rate However it has become evident that DeFi is insufficiently sized at the moment to close the arb entirely and larger pools of capital are required The next step for Ethena is plugging directly to $100b-1tn+ asset managers who can provide the capital required.”
Ethena’s USDe Provides Highest Yield-Bearing
Market analysts noted that USDe’s rise is driven by strong dynamics, propelled by bullish sentiment and growing demand for alternative yield-bearing assets. In contrast to USDT USDT $1.00 24h volatility: 0.0% Market cap: $144.03 B Vol. 24h: $56.55 B and USDC USDC $1.00 24h volatility: 0.0% Market cap: $60.53 B Vol. 24h: $9.36 B , which are commonly used for transactions, most USDe tokens are held to earn rewards. This indicates that users primarily view USDe as a yield-generating asset rather than a medium of exchange.
The official website shows that the holders of USDe can earn a staggering 29% annual percentage yield (APY). Some critics have drawn comparisons between Ethena’s model and the doomed Terra-Luna project. In May 2022, Terra’s algorithmic stablecoin collapsed after its aggressive growth strategy became unsustainable, triggering a major downturn in the cryptocurrency market.
Despite these concerns, demand remains strong, as reflected by its supply and borrow APR rates, which far exceed those of USDT and USDC on Aave. In another major development, DeFi protocol Ethena has partnered with leading on-chain derivatives platform Derive.xyz to enhance liquidity and foster growth for both platforms. In an announcement on Tuesday, December 3, Ethena revealed that the partnership involves multimillion-dollar investments.
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