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Home»TRADING NEWS»Why is USDe market cap growing so fast?
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Why is USDe market cap growing so fast?

By Crypto FlexsFebruary 29, 20243 Mins Read
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Why is USDe market cap growing so fast?
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Ethena Lab’s stablecoin USDe has seen its market capitalization soar to $500 million as nearly half of its tokens are put into staking, increasing the project’s resilience.

Amid cryptocurrency strength, Bitcoin, which has a market capitalization of $62,000, has surged nearly 40% over the past month. Similarly, Ethereum worth $3,402 also increased by 47% during the same period.

USDe experiences massive growth in market capitalization

In a post on X (formerly Twitter), on-chain data researcher Tom Wan informed his 9,585 followers that USDe had reached a market capitalization of $500 million. He also highlighted the significant returns that investors can earn by storing tokens in the project, increasing liquidity.

“With an insane fund-to-play % (average of 39%), Ethena is paying a 24% return on sUSDe.”

Wan presented a graph showing the rapid growth of USDe market capitalization since the end of November 2023, with staked tokens gradually stabilizing around 44%.

Ethena Labs USDe market capitalization and staking ratio. Source: X/Tom Wan

However, Wan explained that the insurance fund reserves would increase tenfold, causing confusion among other X users on social media.

“The good news is that we can increase our insurance fund reserves from $1 million to $10 million.”

Meanwhile, one

Read more: 8 Best Cryptocurrency Platforms for Futures Copy Trading

Wan stated that staking returns will decrease proportionally depending on the funding ratio.

“Depending on the funding ratio, the staking return will fall accordingly. The insurance fund attempts to mitigate funding risk and will be triggered if the funding rate becomes negative and greater than the stETH yield.”

Stablecoins make a comeback after a long downturn

In 2023, the stablecoin market suffered a major crash. Last October, BeInCrypto reported that stablecoins had suffered an 18-month decline.

However, the stablecoin market has been slowly recovering since then. It has grown from a market capitalization of approximately $124 billion in November 2023 to its long-term high of $140 billion today. The last time the stablecoin market capitalization was at this level was December 2022.

Read more: 10 Best Cryptocurrency Exchanges and Apps for Beginners in 2024

The total stablecoin market cap is back to $140 billion.  Source: DefiLlama
The total stablecoin market cap is back to $140 billion. Source: DefiLlama

Many people expect stablecoin regulations to go into effect in the United States this year.

On January 15, Circle Chief Executive Jeremy Allaire said it was “very likely” that stablecoin regulations would be passed in the U.S. in 2024.

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