Why did Binance invest in Ethena Labs?

By KMatt | Blogging Crypto | 19 Feb 2024

Ethena Labs is an innovative company that is revolutionizing the world of decentralized finance (DeFi) with its integrated yield stablecoin called USDe.

What is USDe?

USDe is a token pegged to the US dollar, specifically a delta-neutral synthetic dollar, which means that its value is guaranteed by a combination of derivative positions on Ethereum (ETH).
Simply put, imagine you own USDe:

- Baskets of derivatives: Ethena Labs creates baskets of derivatives that replicate the trend of the dollar

- Collateral: To create these baskets, Ethena Labs deposits ETH as collateral. The value of the collateral must always be HIGHER than the value of the derivatives in the basket

- Generating Returns: Ethena Labs uses a sophisticated investment strategy to generate returns on these derivative positions

- Distribution of returns: the returns (of 5%) are then distributed to the stablecoin holders in the form of interest (currently 5% APY).

Therefore, users who hold USDe earn interest automatically, without having to deposit it in a lending or staking protocol.

Ethena Labs: team and funding

Ethena Labs is backed by a team of experts with proven experience in the crypto and financial sector, to name a few Guy Young (former CMO of BitMEX) and Arthur Hayes, founder of BitMEX.

It also recently announced that it had raised $14 million in a new round of funding, which brought its valuation to $300 million. The round was led by Dragonfly Capital and saw the participation of other important investors, including BitMEX, Brevan Howard Digital and CMS Holdings.

In conjunction with the financing round, Ethena Labs therefore announced the public launch of USDe available for purchase and trading on various DeXs, including Uniswap and Sushiswap.


Why did Binance Labs invest in Ethena Labs?

Multiple and deducible from what I just wrote:

- Its innovative technology can generate an attractive APY without loan deposit or staking

- Experienced and well-known team in the sector

- Growth potential in an ever-evolving and expanding industry (DeFi). Furthermore, in the best case scenario, USDe could have the potential to become one of the main stablecoins used in DeFi

- Alignment with Binance's vision: Binance Labs has always invested in projects that support the growth and adoption of Web3 and DeFi. Ethena Labs is perfectly in line with this vision


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