The crypto market maker DWF Labs intends to introduce a stablecoin that could rival Ethena’s USDE.
The co-founder of DWF Labs, Andrei Grachev, claims that the cryptocurrency trading and market-making business has completed the design of its synthetic stablecoin.
Collateral assets like Bitcoin and other allocated cryptocurrencies are the foundation for synthetic stablecoins, which run on a soft peg with fiat currencies like the US dollar.
Synthetic stablecoins depend on starting and closing short-leveraged bets for the underlying collateral in order to preserve parity.
Despite being purportedly decentralized, this design’s reliance on ongoing trades linked to other coins may add to the volatility.
DWF Labs’ synthetic dollar, according to Grachev, would support a variety of collaterals, such as the three biggest stablecoins: Tether, Circle’s USD Coin, and USDS—which Maker recently rebranded to USDS—among the other stablecoins.
Other underlying assets, including Ethena, Bitcoin, Ethereum (ETH), a small list of long-tail altcoins, and blue chips, were also mentioned in Grachev’s X article from DWF Labs. NFTs may be included, as the title implies.
However, DWF Labs had not confirmed if the blue-chip category applied to non-fungible tokens. By entering the synthetic dollar market, DWF Labs may be able to compete with Ethena, the company behind USDE, the biggest on-chain collateralized stablecoin in the cryptocurrency space.
Since going public in February, Ethena’s offering has raised $2.69 billion in deposits and received monthly commitments to certify the product.
According to DefiLlama, the majority of this entire locked value—roughly $2.58 billion—resides on Ethereum’s blockchain, with the remaining portion dispersed throughout networks like Mantle, Arbitrum, and Blast.
DWF Labs might run into the same kind of resistance in the crypto community that synthetic dollar techniques have.
Leaders in decentralized finance, like as Andre Cronje, the developer of Fantom, likened the industry to TerraUSD, the algorithmic stablecoin implicated in a $60 billion ecosystem collapse in 2022, after Ethena’s introduction.
