Ethena Labs is looking to diversify the collateral base for its synthetic stablecoin USDe by proposing the incorporation of Solana (SOL) into the mix of assets supporting the stablecoin's treasury. Unlike traditional stablecoins like USDT or USDC that are backed by fiat at a 1:1 ratio, USDe maintains its $1 peg through a combination of collateralized stablecoins and hedged cash-and-carry trades, along with a reserve fund to manage market risks.
If the proposal is approved by Ethena's independent Risk Committee, SOL will be gradually integrated as collateral, with an initial target allocation of $100-200 million in SOL positions. This strategic move aligns with Ethena's existing approach of holding a percentage of open interest in major assets like BTC and ETH, where it currently holds 3% of BTC's global open interest and 9% of ETH's.
Additionally, Ethena recently allocated $46 million from USDe's reserve fund to invest in tokenized real-world assets such as BlackRock's BUIDL and Mountain's USDM, reflecting a broader trend in DeFi of generating yield through asset-backed tokens. This expansion of investment options further strengthens USDe's position in the market and diversifies its asset holdings.
On the price front, Ethena experienced a bearish cycle following its all-time high of $1.50 on April 10, leading to a steep decline to $0.20 on Sept. 6 before showing signs of a potential bull phase. The recent price action saw a significant increase, reaching a high of $0.42 on Sept. 30, marking a 102% rise from its low on Sept. 17. Technical indicators like Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) confirm the upward momentum, suggesting further upside potential in the near future.
Looking ahead, market analysts anticipate that ENA is in the process of developing a five-wave pattern that could signal the start of a new bull phase. With a projected target price of $0.62 at the 1.618 Fibonacci extension level and potential sideways corrections along the way, investors are keeping a close eye on ENA's price action for further confirmation of the bullish trend.