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    Ethena’s USDe Surpasses Dai as the Third Largest Stablecoin, Thrives with 24% Yield from Innovative CeDeFi Strategy

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    Ethena’s digital currency, USDe, has become the third largest stablecoin, surpassing Sky’s Dai with a current market value below $6 billion. Since its launch in February, USDe has seen billions in adoption by users eager to benefit from Ethena’s CeDeFi yield strategy, a combination of DeFi smart contracts and offchain derivatives trading. Staked USDe has yielded an annual return of approximately 24%. Despite the inherent risks of the CeDeFi system, USDe has been accepted as trading collateral and integrated into DeFi loan platforms. Ethena’s ENA token has seen a fivefold increase in value since its launch in June.

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    Ethena’s digital currency, USDe, has just taken over Sky’s stablecoin, Dai, and become the third biggest stablecoin out there. It’s trailing behind Tether’s USDt and USD Coin, based on info from DefiLlama.

    The market value of USDe is currently below $6 billion. It’s quite a bit behind USDt and USDC, which are worth around $140 billion and $40 billion respectively.

    On the other side, the value of Dai, the main stablecoin from Sky (previously known as Maker), has dropped to about $4.5 billion. This is a significant decrease from the $7 billion it was worth in 2022. All together, the total value of all the stablecoins in existence is slightly more than $200 billion.

    USDe was introduced in February and quickly gathered billions of dollars from people who hold stablecoins. They were keen to earn big returns from Ethena’s CeDeFi yield strategy. This approach is a blend of DeFi smart contracts and offchain derivatives trading.

    What does CeDeFi mean? Well, it’s any method that combines elements of DeFi and trading on centralized exchanges.

    Since February of this year, people holding sUSDe have enjoyed an average yearly return of 17.5%. This was as high as 55.9% and as low as 4.3% at different times. According to info from DefiLlama, staked USDe, or sUSDe, is giving people approximately 24% yearly returns as of Dec. 12.

    Ethena has a system that lets users create USDe against tokens like Bitcoin, Ether, liquid staking tokens and other stablecoins. It then uses offchain financial derivatives to balance against the portfolio’s inherent volatility.

    However, the CeDeFi trading system used by Ethena comes with its own risks, which include problems in offchain exchanges, custodians, and settlement providers.

    Despite these potential issues, USDe has been rapidly adopted. In October, Wintermute, a digital currency trading desk, began accepting USDe as trading collateral.

    Then in June, sUSDe was integrated with the DeFi loan powerhouse Aave. It’s now the fastest growing asset on its platform, according to Messari.

    Ethena has generated approximately $200 million in fees in 2024. As a little bonus, Ethena Foundation decided to share a portion of these earnings with tokenholders in November.

    Ethena’s own token, ENA, has increased in value about 5 times since June, according to CoinGecko.

    In August, Maker changed their name to Sky and made some changes to Dai, including renaming the decentralised stablecoin USDS. Some criticism has been thrown their way, including for alleged cybersecurity risks and potential asset freezes.

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