Ethena Labs’ synthetic dollar has surged to a $2 billion market cap less than two months after the protocol released its product on Ethereum’s public mainnet. 

Launched in February, the market cap of stablecoin USDe has grown over 147% in the last 30 days, per DefiLlama. CoinGecko categorizes the cryptocurrency as the fifth largest token in the stablecoin market.  

USDe is a yield-bearing crypto that deviates from the typical stablecoin model, holding cash reserves and cash equivalents to maintain pegs to fiat currencies like the U.S. dollar. Instead, USDe taps derivative hedging against collateral positions denominated in Bitcoin (BTC), Ethereum (ETH), ETH liquid staking tokens, and Tether (USDT).

At a $2 billion supply and market cap, Ethena’s synthetic dollar is ahead of incumbents. Only USDT, Circle’s USD Coin (USDC), DAI, and First Digital USD (FDUSD) currently eclipse USDe among stablecoin options. 

Experts draw parallels between Ethena’s stablecoin, Luna UST

USDe may have enjoyed a meteoritic rise in less than a quarter. Still, industry veterans are concerned that Ethena’s product features several similarities to UST, Terra’s algorithmic stablecoin, which ultimately triggered a $60 billion collapse in May 2022. 

Blockchain developer and major Fantom (FTM) contributor Andre Cronje published a long-form tweet on X assessing whether USDe might be the next UST. CryptoQuant Founder and CEO Ki Young Ju also questioned if Ethena’s onboarding on BTC as a backing asset may trigger a similar contagion.