Ethena's USDe stablecoin has exceeded $12 billion in market capitalization, as the protocol plans to launch its Converge blockchain in Q2 2025 to further bridge traditional finance and DeFi.

Ethena's USDe Ascends to Third-Largest USD-Pegged Asset

Ethena's synthetic stablecoin USDe has surpassed DAI and USDS, reaching a market capitalization of over $12 billion and becoming the third-largest USD-pegged asset in DeFi. [1] This growth reflects a 42% increase in circulating supply over approximately one month. [1]

Converge Blockchain: Bridging DeFi and Institutional Finance

Ethena is developing Converge, an EVM-compatible blockchain in partnership with Securitize, scheduled for launch in Q2 2025. The initiative aims to create a "settlement layer between traditional finance and digital dollars," facilitating the integration of Ethereum smart contracts while meeting institutional compliance standards. Converge will support both permissionless DeFi applications and compliant products for traditional financial institutions. The network will utilize permissioned validation nodes, requiring validators to stake ENA tokens to maintain network security. USDe and USDTb will function as native GAS tokens, reducing transaction costs.

Ethena plans to migrate its nearly $6 billion ecosystem to this new blockchain and issue native stablecoins USDe, USDtb (backed by the BlackRock BUIDL fund), and iUSDe specifically for asset management firms.

Strategic Implications and Market Positioning

Ethena's growth is driven by institutional adoption and high-yield mechanisms, with partners like Anchorage Digital and Transak enhancing accessibility. The inclusion of XRP and BNB as collateral diversified USDe's risk profile and attracted $1.2 billion in institutional inflows. Converge is expected to unlock new use cases for USDe, such as cross-chain lending and tokenized real-world assets, while reducing reliance on Ethereum's gas fees.

Aave's Exposure to Ethena: Potential Risks

According to Chaos Labs, one of Aave's risk advisors, Aave's exposure to Ethena poses a potential risk, drawing parallels to the 2008 financial crisis. The advisor suggests that Ethena's dual role of backing assets as redemption capital and liquidity on Aave could amplify stress during a deleveraging event. Ethena has already deposited $580 million of USDe backing assets into Aave, with 55% of USDe-backed assets, or $4.7 billion worth, deposited to Aave.