We are excited to share that Ethena has partnered with EigenLayer and Ether.fi to introduce USDe as the first dollar-denominated token that can be used as security within its generalized shared security platform. To provision this utility, Ethena has chosen ether.fi as our restaking partner to grow the adoption of stable cryptoeconomic security. The integration is expected to go live next week.
Expanding restaking collateral to include dollar-denominated underlying assets broadens the potential use cases for Actively Validated Services (AVS) who prefer less volatile collateral. In the near future, sUSDe may also be added as a restaking asset, enabling a more sustainable restaking model with an embedded value accrual that does not rely quite as much on inflationary governance token rewards to drive restaking activity.
Summary:
i) Ethena’s USDe will be available for deposit on ether.fi, our restaking partner, in exchange for a new Liquid Restaking Token (LRT) called eUSD.
ii) This USDe LRT will provide a dollar-pegged asset for EigenLayer restaking.
iii) In the future, the potential addition of sUSDe as a restaking token would unlock the opportunity for AVSs to use it as an uncorrelated and less-volatile collateral asset for security that also generates rewards for restakers.
Details on the USDe Restaking Modules:
As the first ever dollar-pegged collateral usable within EigenLayer, the eUSD LRT will provide a unique opportunity for restakers across systems and protocols to utilize less volatile collateral for their restaking activities. Previously, it was only possible to use ETH-based assets as collateral for staking. In the future, the incorporation of sUSDe into an LRT may also enable rewarding restakers with a more sustainable real APY.
Sreeram Kannan, Eigenlayer founder said: “A little over a week ago, Eigen Labs released the permissionless token support protocol update enabling any ERC-20 token to be added as a restakeable asset on EigenLayer, significantly broadening the scope of assets that can contribute to the security of decentralized networks. Ethena's USDe is a fantastic step forward in demonstrating the possibilities of shared security on EigenLayer, providing more optionality and utility for AVSs and restakers moving us closer to open innovation."
Implementation via Ether.fi:
As the liquid restaking market leader, managing over 2M Ethereum and a growing product suite of earning (Liquid) and spending (Cash) products, Ether.fi is uniquely positioned to accelerate the adoption of stable economic security through pre-existing partnerships with the largest set of AVS on EigenLayer.
As part of the Ethena and Eigenlayer integration, Ether.fi’s USDe vault will allow users to deposit a number of different stablecoins in return for the new eUSD LRT, which will be used to secure other systems and protocols as part of generalized restaking.
eUSD LRT holders will earn the maximum campaign rewards available for USDe of 20x from Ethena, as well as Ether.fi and EigenLayer points.
“The addition of the eUSD LRT, through our partnership with Ethena, completes the trifecta of restaked major asset offerings across Bitcoin, Ethereum, and stablecoins,” said Mike Silagadze, CEO of ether.fi.
Benefits:
USDe provides one major unique benefit compared to leveraging ETH as the underlying restaked asset: as a dollar-denominated asset, it is uncorrelated to the rest of the typically volatile crypto market.
During periods of stress - when slashing needs to occur, and restaked security is most crucial – the stability of dollar-pegged assets relative to ETH is critically important.
Using eUSD will not only allow for less price volatility compared to ETH, but also help AVS diversify their exposure to ETH’s price - improving the stability of staked assets and predictability of rewards and reducing dependency on ETH.
In the future, the addition of sUSDe as a restaking asset may also provide the benefit of enabling sustainable real rewards. At this moment in time, it is difficult for AVSs to provide a source of rewards or other return for the billions of dollars of restaked capital. If and when sUSDe is incorporated into an LRT, it would offer a new alternative and uniquely solve this problem by offering a structurally higher real-rewards rate than any dollar-based asset since its inception, reducing the need for inflationary governance token rewards to bridge the gap in cost of capital between restakers and systems that use restaked assets for security. This would present a new opportunity for AVSs to improve their marginal economics and offer a more attractive product to users, driving demand.
Driving use cases for AVSs is one of the most important near term priorities for the restaking industry, as it is necessary to unlock the billions of restaked capital currently sitting idle.
sUSDe will continue to play a larger role in the Ethena roadmap. With EigenLayer's integration, more exciting developments are on the horizon to expand our ecosystem.