As the competition in the stablecoin sector intensifies, a leading cryptocurrency exchange MEXC has announced investment in a synthetic dollar stablecoin, USDe issued by Ethena in the tune of US$20m. Accelerating stablecoin adoption and the development in the crypto industry is the part of a wider effort to invest in the industry and aid their rapid adoption.
In fact, MEXC confirmed its commitment through allocating $20 million in USDe or an extra $16 million to Ethena Labs, the developer of synthetic dollar protocol. To support its promotional effort, MEXC is also launching a $1 million reward pool to promote involvement in USDe trading and staking.
MEXC’s Chief Of Operating Officer, Tracy Jin, said that the trading of stablecoins plays a very important role for cryptocurrency adoption. In particular, Jin noted that stablecoins serve as ‘the cornerstone,’ on which the cryptocurrency adoption could occur due to their capability of mitigating the volatility of cryptocurrencies.
MEXC’s Investment Signals Change
The USDe is now the third biggest stablecoin by market capitalization, as it currently has nearly $5.9 billion in circulation. This follows Ethena’s recent success in raising a $100 million funding round which had reportedly been backed by major financial institutions including Franklin Templeton.
For instance, Ethena’s tokenizing of institutional funds ‘has conducted fundraising via a private sale of its governance token to raise infrastructure for blockchain and a token to be applied to traditional finance.
Unlike its competing stablecoins, USDe of Ethena is collateralized with cryptocurrencies rather than cash and other reserves, subject to a hedging strategy, which means it is held out of cash, and so, subject to shade. The current stablecoin market continues to grow even today and the protocol currently provides the USDe holders with a lucrative yield of 9%, a key differentiator in the protocol.
Stablecoin Market Sees Strong Growth
Yield-bearing stablecoins are getting more and more appealing. The U.S. Securities and Exchange Commission (SEC) approved the country’s first yield bearing stablecoin security initiated by Figure Markets earlier this month. The stablecoin about to hit the market will be called YLDS and will offer users a yield of 3.85%.
The stability coins continued to grow and the market cap increased at more than 73% since August 2023 according to Alphractal data. During this period particularly, USDC has demonstrated strong upside in dominant dominance.
A growing stablecoin market doesn’t mean there aren’t many other projects that have chosen to make their way into the unstable business, however — like Tether’s USDt, which still leads the stablecoin pack with over $140 billion of circulation. Last year, tether’s issuer reported more than $13 billion in profits, mostly from its record-shattering US Treasury holdings.
This latest investment by MEXC further indicates the shift in the landscape of the stablecoin industry as further companies seeking to make their share in the otherwise lucrative and competitive space.
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