Ethena Labs launches Solana version of USDe stablecoin

Stablecoin USDe has launched on the Solana network, according to an Aug. 7 announcement from its developer, Ethena Labs. Borrowers will be able to use Solana (SOL) as collateral for USDe loans as soon as Ethena (ENA) token holders approve their use. USDe is also integrated with several Solana apps, including KaminoFinance, Orca, Drift, and Jito.

USDe was previously available only on Ethereum, and loans could be taken out using Ether (ETH) or Bitcoin (BTC) as collateral.

Ethene Labs posted the Solana launch announcement to the X social media platform, stating that “USDe is live on Solana as of today, August 7th.”

According to its documents, USDe is a stablecoin that attempts to maintain a peg to the US dollar. It is backed by both Lido Staked Ethereum (stETH) and short positions in the Ethereum perpetual futures market. It produces a yield from Ethereum staking rewards and from negative funding rates on its short positions.

According to the announcement, the stablecoin is now available on decentralized finance protocol Kamino Finance and decentralized exchanges Orca and Drift Protocol. It will also become available on restaking protocol Jito “when once operational shortly.”

Users can earn Ethena Sats, which are exchangeable for ENA at the end of each campaign, by providing USDe liquidity to the integrated exchanges or by using the stablecoin as collateral for margin trades.

The Ethena Labs team expects a vote to be held next week on whether SOL will become allowed as collateral for USDe loans. The Ethena protocol will not necessarily start shorting SOL right away  because “SOL perps [futures] began trading later and have less historical data on funding rates [when compared to ETH].”

Related: Ethena becomes highest earning DApp in crypto

However, the team does expect the protocol to eventually start issuing short positions against SOL. “Subject to governance, Ethena will scale slowly into SOL as funding is monitored,” the announcement stated.

USDe supporters claim that it pays out a high yield that is also relatively safe, making it a superior asset compared with competitors such as USD Coin (USDC) or Tether (USDT). However, some critics of the coin claim that its yield is unsustainable over the long run. Ethena Labs founder Guy Young has defended it, stating that the coin’s yield is “publicly verifiable” and comes from legitimate revenue sources.