Crypto Billionaire Arthur Hayes and Dragonfly Lead a $6 Million Funding Round for Ethena’s Stablecoin and Bond Token Platform
start crypto ethena has successfully raised $6 million in a seed funding round led by a crypto venture capital firm Dragon-fly and billionaire Arthur Hayes.
The Portugal-based company intends to use the funds to launch its stablecoin and bond asset, scheduled for the third quarter of this year.
The funding round featured the participation of Hayes, who is the founder of BitMEXand his family office, Swirl. Debit, bybit, OKX, Geminiand Huobiamong others, they also contributed to the funding round.
Ethena, established earlier this year, is dedicated to developing a platform that encompasses a concept of digital currency and savings bonds.
The startup aims to offer a stablecoin and digital savings bond that are backed by derivatives and hold their value relative to the US dollar, without relying on traditional financial systems.
The stablecoin, denominated USDe, will be fully collateralized and will employ on-chain custody and settlement.
Its value will be preserved through a hedging mechanism that uses user-provided collateral to stake against Ethereum using perpetual swaps.
This strategy ensures that any gains or losses are evened out, allowing the stablecoin to constantly maintain its value at $1.
“Ethena is building the holy grail of stablecoins: a coin that is truly stable, decentralized, and capital efficient,” Dragonfly general partner Tom Schmidt reportedly. said in a press release.
“Stablecoins have grown enormously in popularity in recent years by providing access to USD-denominated savings and remittances for people around the world, but they have always been hampered by one of three issues. Ethena has an innovative design that addresses these issues while benefiting a broad user base.”
Ethena launches USDe as an alternative to the infamous TerraUSD
Ethena has announced its new stablecoin, USDe, as an alternative to the infamous Terra USD.
TerraUSD was an algorithmic stablecoin that was supposed to have a constant value of $1 through a combination of algorithms and trading incentives involving a sister token, Luna.
However, the stablecoin lost its peg to the dollar in May of last year after a selloff hit the crypto market.
While Terraform Laboratories managed to partially repair the peg by buying $2 billion of UST, the continued selling drained those funds, hyperinflated UST’s sister token LUNA, and tanked the price of LUNA and UST.
Following the collapse of Terra, Hayes wrote a piece which described how a stablecoin backed by crypto derivatives could work.
In March of this year, he proposed another design for a Bitcoin-backed stablecoin that would use exchanges to maintain its $1 peg.
The proposed stablecoin would be based on a pool of BTC short positions and USD inverse perpetual swaps, maintaining its 1:1 peg to USD through mathematical transactions between numerous entities involved.
“1 NUSD = $1 Bitcoin + Short 1 Bitcoin / USD Inverse Perpetual Swap,” Hayes wrote at the time, noting that this is how the proposed stablecoin will be designed.
He said this relationship allows it to create a USD equivalent without encumbering more crypto collateral than it creates in fiat value, unlike MakerDAO.