The rapid rise of USDe and the future development strategy of Ethena Labs

USDe has become one of the largest crypto dollars in the market in just over a year, with a supply close to 6 billion USD, approaching its all-time high. This achievement is not accidental, but rather the result of careful design by Ethena Labs and its founding team.

Every strategic decision made by Ethena Labs is aimed at building a system that can scale exponentially. They create products that can expand to the scale of billions of dollars by acquiring liquidity from centralized exchanges, and utilize perpetual contract funding rates as a revenue engine, which is one of the few sources of income that can maintain large-scale capital pools with an annual yield exceeding 10%. In addition, they have designed a secure and reliable custody method, allowing large capital allocators to confidently hold USDe. In fact, USDe has demonstrated strong risk resistance during multiple major market liquidation events and hacker attacks.

As USDe gradually matures into a blue-chip asset, the Ethena team has begun planning the next phase of its product strategy, aiming to scale USDe to hundreds of billions of dollars, attract millions of new users, and introduce new crypto-native and external capital. After completing the infrastructure integration, Ethena plans to focus on four key areas in the coming years to further expand its market share:

1. Social Platform Integration: Expand the Billion User Market

One of Ethena's most influential initiatives is the direct integration of USDe into an instant messaging application with over 1 billion users. By collaborating with a well-known blockchain platform, Ethena has natively deployed USDe and its yield version within the wallet ecosystem of this popular messaging application.

To attract users, Ethena has launched a 16-week incentive program offering up to 18% annualized yield, with some funds provided by partners. In addition, the protocol's income can provide an approximate 8% base yield, and early users even have the opportunity to achieve double-digit returns.

This episode brings a frictionless USD savings experience to everyday users, especially in emerging markets such as Asia, Africa, and Latin America. Ethena's strategy is simple: engage with users on the platforms where they are already active. Now, users can easily obtain USDe, stake it with one click for returns, and transfer it to friends as easily as sending a message.

This seamless and familiar user experience significantly lowers the entry barrier for cryptocurrency savings, especially for non-DeFi native users. More importantly, this integration opens up a whole new channel for stablecoin demand, with potentially hundreds of millions of people using USDe for daily transfers, consumption, and savings.

2. Cross-border Integration: Bringing Traditional Finance into Blockchain

Ethena, in collaboration with its partners, has developed a new blockchain platform aimed at bringing traditional financial capital on-chain, connecting tokenized assets with the regulated stablecoin world. This platform has brought over $2 billion of real-world assets on-chain, with clients including several well-known financial institutions.

Ethena believes that blockchain has two long-term use cases: settlement for speculation and a storage and transfer layer for stablecoins and tokenized assets. The latter may present a larger opportunity in the next decade, and Ethena has a unique advantage in this area.

This new platform aims to bring billions of dollars of traditional financial capital on-chain and promote the integration of physical assets with decentralized finance. Ethena and its partners collectively hold nearly $10 billion in total locked value/assets under management, making the platform poised to become one of the largest blockchain networks.

Several well-known protocols have already committed to providing support by building and distributing institutional-grade DeFi products on this platform. This new platform will operate on a validator network secured by Ethena's governance token, with validators required to stake the corresponding tokens. Both operators and delegators can earn protocol fees and ecological rewards, establishing a direct connection between institutional trading volume and the value appreciation of token holders.

3. DeFi Integration Promotes rise

The foundation of Ethena is decentralized finance, and over the past year, it has deeply integrated into the DeFi ecosystem. The integration with several well-known DeFi protocols has become the core driving force behind the demand and supply expansion of USDe.

The last significant rise of Ethena was in November 2024, which was almost entirely driven by two DeFi integrations: providing over 1.2 billion USD of sUSDe to a lending platform, and peak usage of over 2.3 billion USD for another DeFi protocol.

This rise momentum has not slowed down. In just one month, a lending platform has increased over $1.5 billion in trading volume for USDe by integrating the tokens of another DeFi protocol, with yields reaching around 8%.

4. Exchange Adoption: $60 Billion Centralized Exchange Opportunities

Another key lever for Ethena's expansion is centralized exchanges (CEX). Its first major initiative is to integrate with a well-known exchange, allowing USDe to qualify as margin collateral, and the early results have been significant.

This integration will go live in May 2024, allowing traders to use USDe as collateral and earn profits while trading. Unlike other mainstream stablecoins, USDe offers an average annual interest rate of 11%, paid daily. Users only need to hold USDe as collateral to offset trading fees or the funding rate cost when going long.

In just a few months, the USDe balance on the exchange soared to over $700 million, surpassing USDC on the platform and capturing a significant share in the stablecoin market. This success provides a model for other major exchanges to replicate this pattern.

Mainstream centralized exchanges hold over $60 billion in stablecoins, but currently, USDe accounts for only about 1% of that. If it can reach a similar share (10%) on other exchanges, this alone could release $5 to $6 billion in new USDe supply.

To support this initiative, Ethena has partnered with multiple institutions to launch a real-time proof of reserves system, publicly verifying the reserves of USDe in real-time. This move aims to provide additional confidence to exchanges and users, ensuring the solvency of USDe and its peg to the USD even during market fluctuations.

Conclusion

With each progress on Ethena's 2025 roadmap, combined with its existing DeFi integrations, Ethena is gradually becoming a key tool in driving the convergence of traditional finance, decentralized finance, and centralized finance. Social platform integrations and new blockchain platforms attract new users and funds from both retail and traditional finance sectors into the cryptocurrency space, while DeFi and centralized exchanges help USDe become the industry benchmark collateral asset. This series of strategic initiatives will lay a solid foundation for Ethena's long-term development.