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Ethena (ENA) Community Proposes Using Solana (SOL) To Back USDe Stablecoin

October 14, 2024

The community behind a synthetic dollar protocol on Ethereum (ETH) is proposing adding a top ETH rival to its reserve assets for its stablecoin.

According to a new Ethena (ENA) community proposal, the community is considering adding Solana (SOL) as a reserve asset for the US-dollar pegged stablecoin USDe.

“This proposal recommends an allocation of USDe’s backing to SOL utilizing substantially the same mechanics as Ethena’s hedging mechanism currently in place with BTC and ETH perpetual futures.

The proposed allocation would be scaled into slowly in consultation with the Risk Committee considering SOL perpetual futures’ shorter history of trading, less liquidity, and less historical funding rate data.”

The proposal would also add liquid-staked variants of SOL, such as Binance Liquid Staked SOL or Bybit Liquid Staked SOL (bbSOL), to the diversified cache of USDe reserves.

Furthermore, the proposal aims to unlock billions in open interest.

“In addition to potentially increasing protocol revenue via SOL funding rates, this will unlock $2-3 billion in additional open interest – allowing Ethena to continue scaling USDe from its current supply of approximately $2.5 billion and keep pace with any potential increase in market demand.”

ENA is trading for $0.419 at time of writing, up 18.5% in the last 24 hours.

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