Ethena, an Ethereum stablecoin protocol, has raised $6.5 million in its seed round led by Dragonfly Capital. The round also had participation from former BitMEX CEO Arthur Hayes and derivatives exchanges including Deribit, Bybit, OKX, Gemini, and Huobi. Ethena aims to create a stablecoin independent from the traditional financial system.
The protocol was inspired by Hayes’ “Dust on Crust” article explaining how stablecoins can be built using derivatives and on-chain collateral. Ethena applies this “Nakadollar” concept using Ethereum instead of Bitcoin. The goal is to make Ethereum the first crypto-native yield-bearing stablecoin without banking reliance.
Ethena sees a potential $130 billion market for this permissionless savings product as the largest opportunity crypto can provide.
Ethena plans to roll out its financial products in two phases. The first phase involves launching usde, an on-chain collateralized stablecoin using derivatives, expected in Q3 2023 with funds from this seed round.
The later phase will include Ethena’s proposed “internet bond.” This is designed to function like a traditional U.S. treasury but without links to any central bank or institution. It will build on staked Ethereum and usde to create a permissionless crypto savings instrument.
Dragonfly general partner Tom Schmidt highlighted the importance of a truly decentralized, stable, and capital-efficient stablecoin as stablecoin usage grows globally for savings and remittances.
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