YZi Labs Increases Stake in Ethena Labs as USDe Gains Traction
YZi Labs, the family office of Binance co-founders Changpeng "CZ" Zhao and Yi He, has deepened its investment in Ethena Labs. Ethena Labs is the protocol behind USDe, which has rapidly become the third-largest U.S. dollar-denominated crypto asset, boasting over $13 billion in circulation.
Ethena's Expansion and New Product Offerings
This investment marks a new growth phase for Ethena, including the extension of its presence on the BNB Chain. This expansion encompasses the rollout of innovative products designed to bridge the gap between traditional finance and the crypto world. These products include USDtb, a fiat-backed stablecoin currently under development, and Converge, an institutional settlement layer being developed in collaboration with Securitize and partners affiliated with BlackRock.
USDe: A Synthetic Dollar's Rise
USDe is marketed as a "synthetic dollar" and employs a unique mechanism to maintain its $1 peg. It uses assets like Bitcoin (BTC), Ether (ETH), and Solana's SOL (SOL) as backing, pairing them with an equal value of short perpetual futures positions on various exchanges. This approach has enabled USDe to surpass the $10 billion supply milestone faster than any other dollar-pegged crypto asset within less than two years of its launch.
Perspectives on the Investment
“Since our investment team first met Guy [Young] in late 2023, Ethena has become the category definer for yield-bearing synthetic dollars,” stated Dana Hou, investment partner at YZi Labs.
Implications for Users and Institutions
These developments translate to more options for users to hold and utilize digital dollars across both centralized exchanges and decentralized finance (DeFi) protocols. Simultaneously, products like Converge are designed to offer institutions a familiar settlement layer for tokenized assets, potentially accelerating the broader adoption of on-chain financial infrastructure.
Further Reading
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