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. 


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"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. 

© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

About Author

MK Manoylov has been a reporter for The Block since 2020 — joining just before bitcoin surpassed $20,000 for the first time. Since then, MK has written nearly 1,000 articles for the publication, covering any and all crypto news but with a penchant toward NFT, metaverse, web3 gaming, funding, crime, hack and crypto ecosystem stories. MK holds a graduate degree from New York University's Science, Health and Environmental Reporting Program (SHERP) and has also covered health topics for WebMD and Insider. You can follow MK on X @MManoylov and on LinkedIn.


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