Ethena Labs plans to expand the backing model for its synthetic dollar USDe, which has a circulating supply of around $4.9 billion. In addition to crypto assets, the protocol intends to use tokenized U.S. equities and perpetual futures linked to stocks available through Binance.
The new structure is designed to complement Ethena’s existing delta-neutral strategy and introduce another potential source of yield. Rather than relying exclusively on crypto basis trades, the protocol will be able to allocate capital across digital assets and instruments linked to traditional equity markets.
Under the new model, bStocks will be used as the spot component of the trade, while corresponding Binance equity perpetual contracts will be used to hedge price risk. According to Ethena, the structure has already been approved under the framework established by the protocol’s Risk Committee.
Ethena Is Extending Its Basis Strategy From Crypto to Equities
Since the launch of USDe, Ethena’s model has been built around delta-neutral trades. The protocol gains exposure to an asset on the spot market while simultaneously opening an offsetting derivatives position of roughly the same size.
For example, if Ethena holds a spot asset, a corresponding short position in a perpetual contract is intended to offset changes in the asset’s market price. As a result, the strategy seeks to reduce its dependence on whether the asset rises or falls.
The main sources of return in this structure can inсlude funding rates as well as the difference between the spot price of an asset and the price of its derivative contract.
Ethena now plans to apply the same principle to tokenized equities. The protocol will use bStocks as spot collateral and open corresponding short positions in Binance equity perpetuals.
What Are bStocks and What Role Will They Play?
bStocks are issued by BTech Holdings Limited and provide price exposure to securities held by the company. Eligible users may be able to convert the tokens into the underlying securities through Binance, subject to applicable regulations and platform requirements.
For Ethena, these instruments make it possible to build the equity side of a basis trade within blockchain-connected infrastructure.
In simplified terms, the strategy would work as follows: the protocol gains exposure to a stock through a bStock while simultaneously opening a short position in the corresponding perpetual contract. If the positions are sized appropriately, changes in the stock price should be largely offset by the derivative position.
However, the strategy is not risk-free. Its performance may still be affected by changes in funding rates, differences between spot and derivatives prices, market liquidity, counterparty arrangements, and operational risks associated with tokenized securities.
Why Ethena Wants to Diversify USDe’s Backing Model
Until now, the protocol has primarily relied on crypto assets and related derivatives. This approach has allowed Ethena to support USDe while generating returns from funding markets, but it has also made the model dependent on conditions in crypto futures markets.
Funding rates in those markets can change quickly. During periods of heavy positioning or shifts in market sentiment, the attractiveness of individual basis trades can decline significantly.
Adding equity-linked assets expands the range of strategies available to Ethena. If conditions in crypto derivatives markets become less attractive, the protocol could potentially reallocate part of its capital toward equity-based trades.
Ethena Labs founder Guy Young described the move as the most significant expansion of USDe’s funding mechanism since the project’s launch.
USDe Has Reached a Scale Where Diversification Matters More
According to the figures cited in the source material, USDe currently has a circulating supply of around $4.9 billion. At that scale, relying exclusively on a limited number of crypto markets becomes increasingly difficult.
The larger the strategy becomes, the more important sufficient liquidity and a broad range of instruments are for deploying capital efficiently.
Ethena views global equity markets as a significantly larger potential opportunity set than crypto. As more traditional market activity moves onto blockchain-based infrastructure, the number of available tokenized instruments could continue to increase.
For the protocol, that could mean a broader collateral base as well as a wider range of markets from which funding income can be generated.
Binance Is Expanding Its Presence in Equity Derivatives
Ethena’s strategy expansion comes as Binance sees growing activity in perpetual contracts linked to traditional financial assets.
According to data provided by Ethena, open interest in Binance equity perpetuals has exceeded $2.9 billion. Open interest represents the value of outstanding derivatives positions that have not yet been closed or settled.
Ethena also reported that aggregate monthly funding on equity perpetuals increased by around 105% this year. The average annualized funding rate over the previous six months was approximately 3.56%.
That level of yield may be lower than rates periodically seen in highly speculative crypto markets. However, equity markets offer a much broader pool of underlying assets.
This could allow Ethena to scale its strategy without concentrating too much capital in a relatively small number of cryptocurrencies.
Tokenized Stocks Are Becoming Part of Crypto Market Infrastructure
In June, Binance opened access for eligible users outside the United States to more than 7,000 U.S.-listed stocks and ETFs. Later that month, the platform introduced bStocks, further linking its crypto trading infrastructure with traditional securities.
According to the cited figures, Binance generated around $433.4 billion in trading volume from perpetual contracts linked to traditional financial instruments in August.
Of that total, approximately $342.9 billion came from contracts tied to equities. The figures point to growing interest in products that provide continuous and potentially leveraged exposure to stock markets.
Binance Head of Exchanges and Trading Shunyet Jan has linked the growing adoption of both bStocks and equity perpetuals to improving liquidity and an expanding range of use cases.
The New Strategy Could Reduce Ethena’s Dependence on a Single Asset Class
For Ethena, moving into equity-linked instruments is primarily an attempt to broaden the structure supporting USDe and diversify its potential sources of return.
If the protocol can run crypto and equity basis trades in parallel, it could gain more flexibility in distributing risk across different markets and funding sources.
At the same time, the effectiveness of the model will depend on more than the size of the equity market. Liquidity in individual contracts, funding rate stability, hedge quality, infrastructure reliability, and access to tokenized securities will all remain important.
Ethena Is Betting on the Convergence of Traditional and Blockchain Markets
The expansion of USDe illustrates how tokenized equities and crypto derivatives are beginning to merge within the same trading infrastructure.
Ethena expects the market for equity perpetuals to eventually become significantly larger than the crypto perpetuals market. That view is based largely on the scale of global equity markets and expectations that more securities and trading activity will migrate to blockchain-based infrastructure.
For USDe, this means moving from a model heavily dependent on crypto funding toward a broader systеm capable of using crypto assets, tokenized equities, and derivatives linked to traditional markets.
The new structure does not eliminate market or operational risks, but it could give Ethena more options for scaling USDe while reducing the protocol’s dependence on conditions in individual segments of the crypto market.