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Ethena (USDe) lands on Solana, SOL, JitoSOL may become new collateral

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Ethena (USDe) lands on Solana, SOL, JitoSOL may become new collateral

According to an announcement by Ethena Labs, its stablecoin USDe has been launched on the Solana network. The team plans to conduct a governance vote next week to decide whether to allow SOL as collateral for USDe loans, with the JitoSOL collateral protocol also being included in the discussion.

Ethena Launches Solana

USDe pegs its value to the US dollar through holding stETH and ETH perpetual contract short positions, generating revenue through ETH staking and short funding rates.

The announcement states that USDe is now usable on DeFi protocols Kamino Finance, decentralized exchanges Orca and Drift Protocol, where users can provide USDe liquidity to these protocols or use it as collateral to earn Ethena Sats.

SOL May Become Collateral for USDe

The Ethena Labs team plans to conduct a governance vote next week to decide whether to allow SOL as collateral for USDe loans, with the JitoSOL collateral protocol also up for discussion.

In addition, Ethena plans to eventually establish short positions for SOL within the protocol, but considering the lack of historical data for SOL perpetual contracts compared to ETH, Ethena will gradually expand its short exposure to SOL based on governance decisions while monitoring funding rates.

Previously, USDe was only available on Ethereum and could only be collateralized with ETH or BTC.

Ethena ENA Adds BTC Support to Expand USDe Scale

USDe Faces Criticism

USDe's mechanism has been under scrutiny since its launch, with DeFi figure Andre Cronje expressing doubts, especially as the recent sharp drop in ETH caused the funding rate to turn negative, resulting in Ethena's expected funding rate revenue turning into losses.

Former DeFi figure Andre Cronje comments on Ethena: Mechanism almost impossible to achieve

The good news is that since PayPal USD PYUSD launched on Solana in May, its market cap has increased from $398 million to $678 million, a 70.35% rise, which may significantly help boost USDe's market cap.