Dragonfly Capital leads $6 million seed funding round for Ethereum stablecoin developer Ethena: Axios

Quick Take

  • Ethena is developing an ethereum-backed stablecoin called USDe.
  • The firm created USDe after the Terra ecosystem collapse of 2022.

The web3 venture firm Dragonfly Capital led a $6 million seed funding round for Ethena, a startup building Ethereum-backed stablecoins. 

Ethena's other funders include Deribit, Bybit, OKX, Gemini, Huobi and BitMEX founder Arthur Hayes, according to Axios

Ethena maintains the peg for its USDe stablecoin by using collateral from users to short ether using perpetual swaps and hedge price exposure. The company has also created a savings bond which uses staked ETH and swap margins to generate yield. 

"In crypto, you're trying to create a parallel financial system, but the most important financial instrument in the entire space (the stablecoin) is still completely tethered to the existing system," Ethena founder Guy Young told Axios. "We're trying to create something that exists outside of the banking system."

Ethena's next move is to finish its testnet phase sometime in the third quarter, launching its USDe stablecoin and savings bond after completion. 

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