While the leading cryptocurrency Bitcoin starts the new week with an increase, altcoins are also experiencing movement.
At this point, while many altcoins rose, some positively diverged from the market. One of them was Ethena (ENA).
The Solana (SOL) proposal was behind the rise of ENA.
Accordingly, the Ethena community proposed that Solana and its staked versions (BNSOL and bbSOL) be added as reserve assets to support USDe. With this proposal, the community aims to diversify the asset pool supporting USDe and thus increase its success and utility in the decentralized finance (DeFi) space.
If the proposal is approved, Solana will join Bitcoin (BTC) and Ethereum (ETH) in Ethena’s collateral assets.
“This proposal proposes that USDe’s backing be allocated to SOL using the same hedging mechanism that Ethena already implements in its Bitcoin and Ethereum futures.
The proposed allocation will be slowly scaled in consultation with the Risk Committee, given the shorter trading history of SOL perpetual futures, less liquidity and less historical funding rate data.”
After this recommendation, Ethena started to rise, and the price increased by 17.7% to $0.4.
What is USD?
USDe differs from stablecoins like Tether (USDT) or Circle (USDC) because it is a synthetic stablecoin and is not backed 1:1 by fiat assets. The stablecoin maintains its $1 peg by collateralizing stablecoins and utilizing a hedged cash-and-carry trade, which involves taking large open-interest futures positions to lock in value and is backed by a reserve fund to manage risk in volatile market conditions.
*This is not investment advice.