Ethena developers have proposed to include SOL in USDe collateral alongside BTC and ETH

What’s new? The Ethena decentralized protocol team has proposed adding the Solana (SOL) blockchain’s native token as a backup asset to collateralize the synthetic dollar USDe in addition to bitcoin and Ethereum. The authors of the initiative from Ethena Labs note that the open interest in SOL on the platforms the company uses for hedging transactions is $2 billion.

The proposal on the community’s forum

What else is known? The Ethena protocol based on the Ethereum blockchain allows ETH coins to be converted into revenue-generating stablecoins without being tied to the banking system. USDe, launched in February this year, is positioned as an “Internet Bond” that functions as a dollar-denominated savings instrument and provides holders with returns from ETH staking and transactions on open-ended futures markets.

In April, developers added bitcoin as a collateral asset for USDe. At the time, they noted that the $25 billion open interest in bitcoin futures available to Ethena for delta hedging would increase USDe’s ability to scale and increase market supply by 2,5 times.

They also added that bitcoin derivatives markets are growing faster compared to ETH, and bitcoin itself provides liquidity better than protocol liquid staking tokens (LSTs). That said, bitcoin does not offer native returns from staking, unlike ETH.

The new proposal notes that the perpetual SOL futures in USDe collateral will utilize the same hedging mechanics as BTC and ETH. The move would integrate USDe into one of the largest cryptocurrency ecosystems and increase the asset’s negotiable supply, as well as open up opportunities to increase the protocol’s revenue when market conditions improve, the authors write.

In addition to SOL itself, the authors propose to include in the reserves of the synthetic dollar and Solana liquid staking tokens from crypto exchanges Binance and Bybit: BNSOL and bbSOL. They are issued to users when SOL are blocked on these platforms.

Community members and Ethena’s risk committee will be able to discuss and vote on the proposal until October 16. If approved, it is planned to distribute $100-200 million in asset positions or 5-10% of the total open interest in SOL futures. It is noted that Ethena maintains a similar allocation in the BTC and ETH markets.

Ethena also has a native token called ENA. In April, it entered the top three most discussed assets, and then the founder of the crypto exchange BitMEX Arthur Hayes predicted the growth of its rate by more than 800%.

The asset is ranked 78th in the overall cryptocurrency ranking with a capitalization of $1,1 billion and is trading at $0,4041, having added 20,1% over the day. Weekly growth was 40,8% and the asset has added 33% since the beginning of the year.

As for USDe, the asset is ranked 108th in the overall ranking and fifth in the list of stablecoins with a capitalization of $2,5 billion.

Earlier, the mechanism for ensuring the USDe exchange rate is pegged to the dollar was criticized by Fantom blockchain founder Andre Cronje and head of analytical company CryptoQuant Ki Young Ju. Cronje noted that Ethena’s strategy is only successful in a growing market. Young Ju also believes that the company will face problems in a bear market and may even repeat the scenario of Terraform Labs’ collapsed UST stablecoin.