Ethena Raises $6.5 Million to Develop an Ethereum-Based Banking System Independent Stablecoin

Ethena, a protocol that seeks to build a banking system independent stablecoin, has announced that it has raised $6.5 million in its seed round. The round, led by Dragonfly, aims to help issue Ethena’s decentralized stablecoin product in Q3 2023, which was inspired by an article written by former Bitmex CEO Arthur Hayes.

Stablecoin Protocol Ethena Raises $6.5 Million in Seed Funding Round

Ethena, an Ethereum stablecoin protocol, has raised $6.5 million in its seed round. The funding round led by Dragonfly Capital also had the participation of former Bitmex CEO Arthur Hayes and some derivatives exchanges such as Deribit, Bybit, Okx, Gemini, and Huobi. Ethena’s goal is to bring to fruition a stablecoin that has no connection with the traditional financial system.

The protocol was inspired by the “Dust on Crust” Arthur Hayes article, where he explains how a stablecoin can be constructed using delta-neutral techniques, derivatives, and onchain collateral. Ethena uses the concept of the “Nakadollar,” which Hayes proposed using Bitcoin, and applies it to Ethereum instead, looking to turn this cryptocurrency “into the first crypto-native yield-bearing stablecoin which is not reliant on the banking system.”

To Ethena, this stablecoin has a potential market of more than 130 billion, given that they view their permissionless savings return product as “the largest market opportunity that crypto can provide for the world.”

Usde and the Internet Bonds

Ethena projects to issue their financial instruments in two phases. The first one includes the rollout of usde, an on-chain collateral derivatives-based stablecoin product, estimated to be available by Q3 2023, using the funds raised during this round.

A later phase will include issuing what Ethena calls the internet bond. The internet bond is projected to behave as a traditional U.S. treasury without being linked to any central bank or financial institution, building on staked Ethereum deposits and usde, developing “the first globally accessible and permissionless crypto savings instrument.”

Dragonfly general partner Tom Schmidt reinforced the relevance of a truly decentralized, stable, and capital-efficient stablecoin product due to the growth of the usage of stablecoins around the world for savings and remittance-related uses.

Schmidt stated:

Ethena has a breakthrough design that remedies these issues while also benefiting a broad user-base. We’re thrilled to be partnering with them to bring their vision to life.

What do you think about Ethena and its goal of creating a banking system independent stablecoin? Tell us in the comments section below.

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