The MEXC cryptocurrency exchange has invested in synthetic dollar protocol Ethena in a broader push to promote stablecoin development and adoption.
On Feb. 26, MEXC said it allocated $20 million to Ethena’s synthetic US dollar, USDe (USDE), and $16 million to developer Ethena Labs. The exchange is also launching a $1-million reward pool to encourage participation in USDe trading and staking.
Source: MEXC Official
MEXC’s chief operating officer, Tracy Jin, described stablecoins as playing a “pivotal role” in promoting cryptocurrency usage and adoption.
With a circulating value of nearly $5.9 billion, USDe is now the third largest stablecoin by market capitalization, according to industry data.
MEXC’s investment came on the heels of Ethena reportedly closing a $100-million funding round backed by major investors, including Franklin Templeton. As Bloomberg reported, the fundraising was financed through a private sale of Ethena’s governance token, ENA (ENA).
Ethena will reportedly use the funds to build a blockchain and token for the traditional finance industry.
Related: Ethena assures users of solvency after Bybit hack
Stablecoin competition heats up
Ethena’s USDe differs from other stablecoins, such as Tether’s USDt (USDT) and USD Coin (USDC), by using a hedging strategy collateralized by cryptocurrencies. Ethena currently offers USDe holders a 9% yield.
USDe’s market cap has swelled over the past year. Source: CoinMarketCap
Momentum for yield-bearing stablecoins appears to be gaining ground. Earlier this month, the US Securities and Exchange Commission approved the country’s first yield-bearing stablecoin security from Figure Markets. The forthcoming YLDS stablecoin will offer users a yield of 3.85%.
The combined value of stablecoins now exceeds $220 billion, representing a gain of more than 73% since August 2023, according to data from Alphractal. Over that period, USDC’s dominance has been on a clear uptrend.
Meanwhile, Tether’s USDt remains the largest stablecoin with more than $140 billion in circulation. The USDt issuer clocked more than $13 billion in profits last year as its US Treasury holdings reached an all-time high.
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