Key Insights

• Ethena aims to enhance USDe stability by backing it with Solana and other liquid staked assets, boosting DeFi utility.
• ENA’s price rose 12%, reaching $0.3797, reflecting investor confidence amid USDe’s rapid market cap growth of $2.5 billion.
• Cardano (ADA) shows bullish momentum, with potential overbought conditions indicated by RSI, as market volatility increases.

Ethena community has proposed a new mechanism for its synthetic dollar, USDe, aiming to use Solana as a reserve asset. This initiative follows the recent success of Ethena (ENA), whose price has surged 12%, pushing its market capitalization beyond $1.06 billion.

New Proposal for Synthetic Dollar

The proposal to back USDe with Solana aligns with Ethena’s existing strategy that includes using Bitcoin (BTC) and Ethereum (ETH) in perpetual futures trading. The introduction of Solana is intended to diversify the reserve assets that support USDe, thus enhancing its stability and utility in decentralized finance (DeFi).

In addition to Solana (SOL), the proposal also includes Binance Liquid Staked SOL (BNSOL) and Bybit Liquid Staked SOL (bbSOL) as eligible assets. This expansion aims to improve the resilience of USDe by increasing the range of assets backing it. 

According to an official statement from the Ethena Foundation, 

“The proposed allocation would be scaled into slowly in consultation with the Risk Committee considering SOL perpetual futures shorter history of trading, less liquidity, and less historical funding rate data.”

Launch and Market Reception of USDe

USDe was launched on the Solana blockchain in August 2023, utilizing Layerzero’s OFT standard. Since its launch, the synthetic dollar has gained significant traction, quickly achieving a market cap of $2.5 billion. Ethena aims for USDe to compete directly with established stablecoins like Tether.

The proposal to utilize Solana as a backing asset is expected to unlock additional open interest of $2 to $3 billion, allowing Ethena to expand USDe beyond its current supply limits. By incorporating Solana into its asset mix, Ethena aims to enhance its revenue through SOL funding rates while responding to market demand.

Recent Performance of Ethena (ENA)

The recent developments have had a noticeable effect on the price of Ethena (ENA). As of press time, the price stood at $0.3797, with a trading volume of approximately $406 million in the last 24 hours. This marks a 12.57% increase in the past day and a 27.86% increase over the past week. Ethena’s circulating supply is currently 2.7 billion ENA tokens, bringing its market cap to around $1.045 billion.

The surge in ENA’s price reflects investor confidence in Ethena’s strategy and its potential for future growth. The ongoing expansion of USDe and the proposed incorporation of Solana signal a commitment to diversifying its offerings in the rapidly evolving DeFi space.

Cardano (ADA) Shows Upward Momentum

In addition to Ethena’s developments, the cryptocurrency market has seen positive movements in other assets, such as Cardano (ADA). Currently trading at $0.3847, ADA has demonstrated upward momentum according to the one-hour chart analysis. The Bollinger Bands indicate increased volatility, with the price touching the upper band, suggesting potential overbought conditions.

Source: TradingView

The MACD indicator reinforces the bullish sentiment, with the MACD line positioned above the signal line. The histogram displays green bars, suggesting ongoing buying pressure. However, the proximity between the MACD lines indicates that momentum could weaken without increased trading volume. 

The Relative Strength Index (RSI) stands at 71.66, suggesting that ADA is currently overbought, pointing towards a possible price correction or consolidation if buying pressure diminishes.