Ethena Raises $6.5 Million in Seed Funding for Stablecoin Protocol

Ethena Raises $6.5 Million in Seed Funding Round

Ethena, an Ethereum stablecoin protocol, has successfully raised $6.5 million in its seed funding round. This funding round was led by Dragonfly Capital, with participation from notable industry figures such as former Bitmex CEO Arthur Hayes and various derivatives exchanges including Deribit, Bybit, Okx, Gemini, and Huobi. Ethena’s primary objective is to create a stablecoin that operates independently of the traditional financial system.

Ethena is inspired by Arthur Hayes’ “Dust on Crust” article, which outlines the construction of a stablecoin using delta-neutral techniques, derivatives, and onchain collateral.
Ethena adopts the concept of the “Nakadollar” proposed by Hayes, but applies it to Ethereum rather than Bitcoin, aiming to create the first crypto-native yield-bearing stablecoin that is not reliant on the banking system.
Ethena believes that this stablecoin has a potential market value of over $130 billion, considering their permissionless savings return product as the largest market opportunity in the crypto world.

Usde and the Internet Bonds

Ethena plans to issue their financial instruments in two phases:

The first phase involves launching usde, an on-chain collateral derivatives-based stablecoin product, which is expected to be available by Q3 2023, utilizing the funds raised in this round.
The second phase includes the issuance of the internet bond, which aims to function like a traditional U.S. treasury without any ties to central banks or financial institutions. It will be built on staked Ethereum deposits and usde, creating the first globally accessible and permissionless crypto savings instrument.

Dragonfly general partner Tom Schmidt emphasized the significance of a decentralized, stable, and capital-efficient stablecoin product, considering the increasing usage of stablecoins worldwide for savings and remittance purposes. Schmidt expressed excitement about partnering with Ethena to bring their innovative vision to reality.

Hot Take

Ethena’s successful seed funding round and its ambitious plans to create a crypto-native yield-bearing stablecoin highlight the growing demand for stablecoin solutions outside the traditional financial system. By leveraging Ethereum and implementing innovative strategies, Ethena aims to tap into a massive market opportunity. If successful, their usde and internet bond products could revolutionize the crypto savings landscape and provide users with greater financial independence and accessibility.