Synthetic Stablecoins Reshape Finance as USDe Challenges Dollar Dominance

Ethena Labs has announced that its synthetic stablecoin protocol has surpassed $500 million in cumulative revenue, marking a significant milestone in the rapidly evolving stablecoin market. The protocol’s synthetic stablecoin, USDe, has seen a surge in adoption and market share, with its circulating supply reaching an all-time high of $11.7 billion as of late July 2025. Protocol revenue in the past week alone reached $13.4 million, underscoring the strong inflows into USDe and favorable market conditions that have amplified returns from its delta-neutral hedging reserve model.

According to data from decentralized finance analytics platform DefiLlama, USDe has the third-largest market capitalization among all stablecoins and the largest among synthetic stablecoins. The market cap of USDe has grown by 86.6% in the past month, reflecting growing confidence in the token as a store of value. Other synthetic stablecoins, such as Sky Dollar (USDS) and Falcon USD (USDf), have also seen gains, with USDS experiencing a 14% increase in market cap and USDf seeing a 89.4% rise.

Synthetic stablecoins are distinct from fiat-backed stablecoins like Tether (USDT) and USD Coin (USDC) in that they maintain dollar parity through financial engineering, including derivatives and on-chain collateral, rather than relying on traditional fiat reserves. This design offers benefits such as lower transaction costs and enhanced capital efficiency, but also carries risks of depegging and instability. The recent growth in synthetic stablecoins has positioned them as viable alternatives to traditional models, with Ethena’s USDe emerging as a key player in the space.

The broader stablecoin market has also seen growth, with the total market cap rising to $277.8 billion in early August 2025, up 4% from the previous month. This increase follows regulatory developments in the United States, where President Donald Trump signed the GENIUS Act into law on July 18, 2025, aiming to provide clearer guidelines for stablecoin operations. The act has been seen as a step toward legitimizing stablecoins as a tool for expanding the dollar’s global reach, with U.S. Federal Reserve Governor Christopher Waller noting its potential to enhance stablecoin utility and international adoption.

In parallel, China has reportedly begun considering the authorization of yuan-backed stablecoins, marking a potential policy shift for a country that has historically maintained strict controls over cryptocurrencies. According to sources, the State Council may review and approve a roadmap to promote the global use of the yuan through stablecoins, which could include cross-border trade applications. This move aligns with China’s broader ambitions to internationalize the yuan and compete with the dollar and euro as a reserve currency.

Goldman Sachs has also weighed in on the growing influence of stablecoins, suggesting that while the market could disrupt traditional financial services, the extent of disruption remains an open question. The firm anticipates that stablecoins will play a significant role in infrastructure-related financial services, including interbank payments and cross-border transactions. However, it downplays the risk to consumer-focused payment services and remittance companies, which it sees as more likely to integrate stablecoins than face disintermediation.

Ethena’s continued success highlights the shifting dynamics of the stablecoin sector, where synthetic models are gaining traction alongside traditional fiat-backed tokens. With regulatory clarity in the U.S. and potential developments in China, the landscape for stablecoins is set to evolve further in 2025 and beyond. The performance of USDe and other synthetic stablecoins will depend on their ability to adapt to regulatory frameworks, maintain stability, and expand their utility across DeFi ecosystems.

Source: [1] Ethena Crosses $500M in Revenue as Synthetic Stables ... (https://cointelegraph.com/news/ethena-crosses-500m-cumulative-revenue-synthetic-stablecoins-gain-ground) [2] USDe Hits $5.7B Cross-Chain Volume: Can It Outpace DAI ... (https://www.ccn.com/education/crypto/usde-5-7b-cross-chain-vs-dai-frax) [3] USDe Price USD, USDE Price Live Charts, Market Cap & ... (https://www.bitget.com/price/usde) [4] China weighs yuan-backed stablecoins in major policy shift (https://cointelegraph.com/news/china-considering-yuan-backed-stablecoins-global-currency-usage) [5] It's Been The 'Summer of Stablecoins,' Goldman Says. Will ... (https://www.investopedia.com/it-s-been-the-summer-of-stablecoins-goldman-says-will-traditional-finance-be-upended-11793816)