Ethena has partnered with crypto exchange Coinbase to power their U.S. dollar savings product. The integration will involve Ethena’s USDe and will go live next week, according to the founder, Guy Young. He added,
The upcoming integration next week will be the first time Ethena products are available for their (Coinbase) 100m+ user base.
According to Young, the deal will involve USDe leveraging Coinbase’s idle balances and direct yield on them.
Will the deal boost Ethena and USDe?
USDe is largely positioned as a stablecoin, but in practice, it is more of a yield product that directly competes with Sky Dollar (USDS, formerly DAI) or Ondo Finance’s USDY.
Traditionally, it has been a rival to the U.S. Treasury bill that offers interest. However, it relies on delta-neutral strategies to generate the yield. And since the strategy heavily fluctuates with crypto market phases, this has hampered Ethena’s growth.
In fact, since the crypto downturn began last October, Ethena’s TVL (total locked value) dropped 3x from nearly $15B to a low of $4.2B. The slump was primarily driven by USDe redemption after the Binance-driven liquidation cascade.
The bear market meant low funding rates, effectively grounding its delta-neutral strategy to a halt. Even rivals offered better yields with less risk, further stifling demand for the USDe.
As part of its broader pivot, Ethena decided to go beyond crypto and targeted booming tokenized assets and other alternatives to scale its yield-generating strategy.
That said, Coinbase said it purchased ENA, the native token of the Ethena protocol, in the open market as part of the deal. Lately, Coinbase deals have triggered bullish rallies like those seen with HYPE after the Hyperliquid USDC deal.
Similarly, ENA’s mooned nearly 28% after the update and defied broader market contraction. The altcoin surged from $0.08 to $0.10, but was just shy of the 50-day SMA (white), which has acted as both resistance and support in the past.
If ENA bulls falter at the 50-day SMA, a price rejection at the level could drag the altcoin back to the range-low near $0.80.
On the contrary, flipping the 50-day SMA into support could allow bulls to use the level as a springboard towards the range-high at $0.14.
Final Summary
- Coinbase has tapped Ethena to drive yield on idle US dollar balances for its users.
- The deal sparked ENA’s 27% rally in the past 48 hours, but it was unclear whether the momentum would extend.