by Jude Ayua
Ethena Labs has launched a new stablecoin, USDtb, backed by BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL). USDtb maintains a 1:1 reserve ratio with cash or cash-equivalent assets similar to other fiat-backed stablecoins like USDC and Tether. USDtb is unique because it allocates 90 percent of its reserves to BlackRock’s BUIDL fund, enabling it to scale without practical constraints, enhancing scalability and stability.
Ethena launched USDtb in partnership with Securitize, serving as a traditional stablecoin with a distinct risk profile compared to its derivative-based USDe token. Ethena’s Risk Committee approved USDtb as a backup asset for USDe to mitigate risks during market volatility. As of December 2024, USDe’s market capitalization reached $5.9 billion since its launching earlier in the year. USDtb will also be an alternative collateral for margin trading on centralized exchanges.
Ethena partnered with Copper, Zodia, Komainu, Coinbase Web3 Wallet as USBtb’s custodians. Cumberland, Wintermute, Amber, GSR, and SCB Limited are its liquidity providers. Code4rena, Quantstamp, Cyfrin, Pashov successfully audited USDtb. Ethena has also submitted an application for USDtb’s inclusion in Sky’s $1 billion Tokenization Grand Prix to support real-world asset projects.
Read also: Ripple to launch USD-backed stablecoin, RLUSD
How BUIDL Benefits Ethena’s USDTb stablecoin
BlackRock launched the BUIDL token, its first tokenized product, in March 2024. Pegged to USD$1, BUIDL is backed by short-term US government bonds and has attracted over $520 million in deposits, making it the largest offering in the $2.3 billion tokenized U.S. Treasury market. Ethena’s adoption of BlackRock’s BUIDL fund for its stablecoin, USDtb, is beneficial for the following reasons:
- Stability and Trust: Ethena’s allocation of 90 percent of USDtb’s reserves to BUIDL will ensure the stablecoin’s stability and reliability. BlackRock’s reputation will increase trust among users and investors.
- Scalability and Market Differentiation: BUIDL provides a leverage for USDtb to scale more effectively among other stablecoins. BUIDL’s backing distinguishes USDtb in the vast stablecoin market, potentially attracting institutional investors seeking compliant and secure digital assets.
- Integration with TradFi: Ethena’s integration of BUIDL is significant as it bridges decentralized finance (DeFi) and traditional financial (TradFi) markets. It also signals an opportunity for increased adoption of tokenized assets and the potential for integrating TradFi with blockchain solutions.
- Compliance and Transparency: Ethena’s association with BlackRock, a regulated entity, will enhance USDtb’s compliance profile, addressing investors’ regulatory concerns. It could also lead to more acceptance among regulators and TradFi institutions.
Read also: Stablecoins gain traction, threatening bitcoin’s dominance
Jude Ayua is a policy analyst at CAB. A lawyer, Jude is an associate at Infusion Lawyers where he is a member of the Blockchain & Virtual Assets Group. He is also a member of the Policy & Regulations Committee of the Stakeholders in Blockchain Technology Association of Nigeria (SiBAN). Jude reports and writes on crypto policy and regulations. jude@infusionlawyers.com
