Ethena Labs' USDe Gets Green Light for $250M Allocation to New Frax Finance Pool
Summary:
Frax Finance, a DeFi lending protocol, gets approval for a $250 million allocation of Ethena Labs’ USDe to a new liquidity pool, marking a step in Frax’s Singularity Roadmap. This development will let Frax mint new tokens backed by overcollateralized debt, creating one of the most significant liquidity pools in the DeFi landscape. Ethena Labs recently hit the $2 billion mark in total value locked while offering a 37.1% annual percentage yield on USDe to over 125,300 investors, and added Bitcoin backing to its synthetic dollar to expand its supply.
Frax Finance, a lending platform in the realm of decentralized finance (DeFi), has moved forward with a community governance proposal. The proposal given the green light to the $250 million Ethena Labs' USDe allocation for a new liquidity pool. This move is part of Frax’s Singularity Roadmap, fostering the establishment of an automated market operation (AMO) and paving the way for the genesis of FRAX tokens backed by overcollateralized debt. Approved on April 5, the proposal sets the stage for one of the most substantial liquidity pools in the DeFi sector, allowing Frax the opportunity to diversify its yield backing, as stated by Ethena Labs in a blog post on April 8.
Having commenced on the day before, FRAX has introduced a USDe POL, populating one of the highest volume dollar liquidity pools on-chain and offering FRAX the resource to diversify their yield backing. As of 10:45 am UTC, the newly established Curve-based liquidity pool housed $44.9 million worth of liquidity, comprising $30.6 million in FRAX coins, and $14.6 million in the USDe synthetic dollar. This information corresponds with the data available on Curve Finance.
On April 6, less than two months post the mainnet launch of USDe on February 19, Ethena Labs crossed the $2 billion milestone in total value locked (TVL), as per DefiLlama data. Currently, the protocol is attracting more than 125,300 investors by offering 37.1% annual percentage yield (APY) on USDe, as reported on its homepage.
Last week, Ethena Labs gained much attention when they announced to add Bitcoin backing to its USDe synthetic dollar to further increase its current supply of $2 billion. March 8 saw Ethena Labs as the top-earning decentralized application (DApp) in the cryptocurrency market, causing concerns among the community about the financial sustainability of the protocol with their 67% APY on USDe.
Success brought Ethena to the investor’s radar, making it Delphi Ventures' prime choice for the current cycle. José Maria Macedo, CEO of Delphi Labs and founding partner of Delphi Ventures, wrote in an April 2 post that the USDe could potentially overtake Tether's USDT and Circle's USDC to become the largest dollar-backed asset, with Ethena potentially being the most revenue-generating project in the world of cryptocurrency.
Published At
4/8/2024 2:20:57 PM
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