Ethena Labs expands synthetic dollar USDe to Solana, plans SOL backing

Ethena Labs has expanded its “synthetic dollar” USDe to the Solana blockchain and revealed intentions to add the SOL token as a backing asset for the stablecoin, according to an Aug. 7 statement.

USDe’s integration with Solana was achieved through LayerZero’s omnichannel fungible token (OFT).

Ethena Labs noted that over 90% of Solana’s $3.5 billion stablecoin supply does not offer rewards. USDe aims to fill the gap and attract new users by allowing them to transact on Solana while earning rewards through its staked version, sUSDe.

Furthermore, the company plans to propose SOL and a liquid staking version — jitoSOL — as collateral assets for USDe through a governance decision next week. This move could unlock an additional $2 billion to 3 billion in open interest across major exchanges, further enhancing USDe’s scalability.

Additionally, USDe holders on Solana can earn Ethena sats by staking USDe on DeFi protocols like Kamino, Orca, and Drift.

Market analysts noted that these moves could boost USDe’s adoption among retail crypto users. The Solana blockchain’s quick transaction speed and low costs have helped it become a prominent stablecoin network, attracting attention from significant payment companies like PayPal.

Following the announcement, USDe has quickly gained traction, with Solscan data showing its supply on Solana at $523,936 as of press time. According to CryptoSlate’s data, USDe is the fourth-largest stablecoin in the crypto market, with a circulating supply of $3.1 billion.

$100 million redemption

Meanwhile, Ethena Labs’ expansion occurred during the week USDe experienced its largest redemption of nearly $100 million on Aug. 5 amid a broader crypto market sell-off.

Conor Ryder, Ethena Labs’ Head of Research, confirmed that USDe managed these redemptions effectively, maintaining its peg within approximately 30 basis points despite market fluctuations.

USDe does not rely on direct fiat or tangible asset backing, unlike traditional stablecoins. Instead, it uses derivative hedging with collateral positions in ETH and Bitcoin and an arbitrage system for minting and redeeming to maintain its US dollar peg.