YZi Labs, a venture capital firm with a keen focus on technology, has announced an expansion of its investment in Ethena, a prominent stablecoin issuer known for its digital dollar, USDe. This strategic investment aims to facilitate the broader adoption of USDe across both decentralized and centralized financial platforms.
The latest funding round will enable Ethena to enhance its USDe offerings on the BNB Chain, as well as advance the development of its new stablecoin, USDtb, and an institutional-level settlement infrastructure dubbed “Converge.” According to a statement from YZi Labs, these initiatives are in line with their commitment to foster open and scalable digital dollar frameworks that enhance efficiency and liquidity in the financial sector.
USDtb is designed to be backed by short-duration treasury assets, such as BlackRock’s BUIDL. Meanwhile, Converge aims to operate as an Ethereum Virtual Machine-compatible chain targeted at tokenizing real-world assets, a move that further underscores Ethena’s ambition to integrate stable, yield-generating assets into the core functionalities of the crypto economy. Guy Young, CEO of Ethena Labs, expressed enthusiasm about the project, stating, “Embedding stable, yield-bearing assets directly into the heart of the crypto economy has always represented the holy grail of digital dollar distribution.” He noted that the expansion of USDe across various exchanges, decentralized finance (DeFi) protocols, and international user bases is paving the way for this vision to materialize.
The push for stablecoin adoption coincides with significant market projections. The U.S. Treasury estimated in April that the stablecoin sector, currently valued at $295 billion, could balloon to $2 trillion by 2028. This optimism has been further fueled by recent legislative advancements, such as the GENIUS Act signed by U.S. President Trump in July, which has been described as one of the most comprehensive regulatory frameworks for stablecoins to date.
Having initially collaborated with Ethena through its Season 6 Incubation Program in February 2024, YZi’s investment comes at an instrumental time for USDe, which is primarily backed by cryptocurrencies and utilizes a delta-neutral hedging strategy to maintain its peg to the U.S. dollar.
Ethena’s plans for USDe’s integration on the BNB Chain include the development of new money markets and partnerships with various protocols, already underway as part of their expansion plans. As of now, USDe has achieved a remarkable market capitalization of $14 billion, placing it third behind established players such as Tether (USDT), with a market cap of $171.5 billion, and Circle’s USDC at $73.9 billion, according to CoinGecko. The growing acceptance of USDe presents an opportunity for it to make inroads into the dominance of both USDT and USDC.
Additionally, YZi Labs, which oversees a diverse portfolio of approximately $10 billion that spans across cryptocurrency, AI, and healthcare sectors, recently endorsed a decentralized perpetuals exchange named Aster. This platform is set to incorporate USDe within its ecosystem as part of its strategy to compete with existing market players like Hyperliquid.
In the competitive landscape of stablecoin issuance, Ethena has garnered significant backing not just from YZi, but also from major asset management firms, including Fidelity and Franklin Templeton, as well as from the venture capital firm DragonFly.
