Ethereum News Today: USDe Supply Surges 75% in August 2025, Rises to Third-Largest Stablecoin

USDe, the synthetic dollar stablecoin launched by Ethena Labs, has rapidly gained traction in the DeFi ecosystem. Between July and August 2025, its supply surged by over 75%, reaching 9.3 billion tokens [1]. This significant growth has positioned USDe as the third-largest dollar-pegged stablecoin, following Tether (USDT) and Circle’s USDC. The stablecoin’s rise is attributed to its unique mechanism, which combines a delta-neutral hedging strategy with exposure to crypto derivatives, offering users both stability and attractive yields [1].

Unlike traditional stablecoins that rely on fiat reserves, USDe is backed by crypto collateral such as Ethereum (ETH) and Bitcoin (BTC). Ethena Labs uses these assets to open short positions in perpetual futures markets, effectively hedging against price volatility. This ensures that USDe remains stable at $1 even in the face of market fluctuations. The strategy also allows Ethena Labs to generate returns by leveraging funding rates in derivatives markets [1].

Users can stake USDe into sUSDe, earning annualized yields of 10%–19% across various DeFi platforms. These high returns have attracted both retail and institutional investors, particularly those seeking yield in a highly competitive DeFi environment. The project has also expanded to 24 blockchain ecosystems, including Ethereum, Solana, and TON, and is deeply integrated with major protocols such as Aave, Curve, and Uniswap, providing robust liquidity and diverse use cases [1].

Ethena Labs has also taken steps to enhance compliance and institutional appeal. It introduced USDtb, a version of USDe that complies with the U.S. GENIUS Act, and partnered with regulated institutions like Anchorage Digital. These efforts have increased trust in the stablecoin and attracted capital from traditional finance [1].

Despite its success, USDe’s model is not without risks. The delta-neutral strategy is most effective in bullish conditions. In a bear market, funding rates may decline, reducing or eliminating returns, a concern highlighted by Fantom’s CTO Andre Cronje [1]. The 2022 Terra-Luna collapse demonstrated that stablecoins relying on complex financial instruments can be vulnerable during extreme volatility. While Ethena Labs has improved transparency and formed strategic partnerships, systemic risks remain.

Additionally, USDe’s hedging strategy depends on liquidity and technical execution in derivatives markets. Low trading volumes or operational issues, such as hacks or exchange failures, could impact its stability. Regulatory uncertainty is another challenge. Although Ethena Labs is currently compliant, evolving global regulations could affect USDe’s operations and investor confidence [1].

Looking ahead, USDe is expected to continue growing as Ethena Labs expands its presence to newer blockchains and Layer 2 solutions. The team is also exploring enhancements to its hedging model and the introduction of new financial tools to boost returns. Collaborations with traditional finance firms and the potential for community governance via the ENA token could further solidify its position in DeFi [1].

However, USDT and USDC still dominate the stablecoin market, and USDe must continue innovating while navigating regulatory and market challenges to maintain its momentum.

Source: [1] Revealing USDe: The Synthetic Dollar Stablecoin Taking Over DeFi (https://coinmarketcap.com/community/articles/6890614cf66ec432fbcd026c/)