Dragonfly Capital leads the investment, supported by Arthur Hayes, in the ETH-backed stablecoin USDe, raising $6 million.

Lead by web3 venture capital firm Dragonfly Capital, with support from the family office of BitMEX co-founder Arthur Hayes, Ethena plans to create a algorithmic stablecoin USDe backed by ETH, aiming to break free from the constraints of the banking system and traditional finance.

Ethena: A Platform Focused on Compliance Training

Ethena is a company based in New York, USA, specializing in compliance and training. It integrates compliance workflows into an easy-to-use platform, covering areas such as employee training, anonymous reporting tools, and case management features. Their training includes various topics like anti-money laundering, data privacy, insider trading, anti-corruption, and harassment prevention. Clients include Notion, Zendesk, Figma, and they have received support from investors like GSV, Homebrew, Neo, and Village Global.

Ethena has previously raised $50.4 million through multiple funding rounds. The recent $6 million funding was led by web3 venture capital firm Dragonfly Capital. According to a report by Axios, investors also include Deribit, Bybit, OKX, Gemini, Huobi, and the family office of BitMEX founder Arthur Hayes.

USDe: A Stablecoin Independent of Traditional Finance

Ethena has developed a stablecoin called USDe, which hedges price risks using users' collateral and perpetual contracts to maintain its peg to the US dollar. In other words:

1 USDe = 1 USD worth of ETH + 1 USD worth of short ETH/USD perpetual contract

By holding an equivalent amount of collateral ETH and perpetual contracts, any gains or losses of either asset are offset against each other.

This is different from mainstream stablecoins like USDC and USDT, which primarily rely on reserves based on fiat assets such as US treasuries to ensure their peg to fiat currencies. While most investors consider this method safer, it still depends on traditional financial systems to operate.

Founder of Ethena, Guy Young, stated:

In cryptocurrencies, you're trying to create a parallel financial system, but the most critical financial tool in the space, stablecoins, is completely tied to the existing system. We're trying to create something outside of the banking system.

Previously, BitMEX founder Arthur Hayes also advocated for creating algorithmic stablecoins backed by bitcoin derivative products. Ethena's USDe clearly draws inspiration from his ideas, and Ethena has received support from his family office.

The company aims to complete the testing phase in the third quarter and launch its stablecoin and native bond assets in the coming months.