Ethena’s Dual Stablecoin Strategy Puts Pressure on USDC’s Market Dominance

Ethena’s innovative dual-stablecoin strategy is rapidly carving out significant market share, raising intrigue on its potential to challenge Circle’s USD Coin (USDC) for dominance. By offering both a synthetic dollar (USDe) pegged via derivatives and a reserve-backed token (USDtb) supported by real-world assets, Ethena appeals to distinct DeFi and institutional user bases, fueling impressive growth but also exposing inherent risks.

Ethena’s Dual Threat: How USDe & USDtb Drive Market Share vs. USDC

Ethena’s unique approach combines two distinct stablecoin models under one roof. USDe, the synthetic dollar, aims to maintain its peg using sophisticated delta-hedging strategies involving crypto derivatives. This model enables yield generation, attracting DeFi users. USDtb, conversely, functions more like traditional stablecoins, backed by tangible RWAs held with regulated custodians, targeting users prioritizing stability and compliance.

Related: Arthur Hayes Bullish on Ethena’s USDE as $360 Million Capital Raise Targets Nasdaq Listing

This combination has proven potent. In July 2025, USDe flipped MakerDAO’s Dai (DAI) to become the third-largest stablecoin by market cap, trailing only industry giants Tether (USDT) and USDC.

Santiment data shows USDe’s market cap exceeding $12.26 billion, with holder growth surging 72% in six months to over 32,500 non-empty wallets. USDtb adds another $1.8 billion to Ethena’s ecosystem, demonstrating demand for both models.

Strategic Alliances: Binance, Anchorage, Jupiter Amplify Ethena’s Reach

Ethena’s expansion heavily relies on strategic partnerships embedding its tokens across major platforms:

• Binance: The world’s largest exchange integrated USDe trading pairs and allows its use as collateral for futures, instantly exposing it to millions of traders.
• Anchorage Digital: Partnering with this U.S.-regulated custodian to issue USDtb (starting October 2025) significantly bolsters USDtb’s compliance posture and appeal to institutions.
• Jupiter (Solana): A collaboration aims to introduce JupUSD, potentially replacing hundreds of millions ($750M cited) worth of USDC liquidity within the popular Solana DEX aggregator’s ecosystem with an Ethena-powered alternative.

These deals demonstrate Ethena’s aggressive push to become a foundational stablecoin provider across both centralized and decentralized platforms.

USDe Depeg Explained: October Crash Exposed Synthetic Model Risks

Despite its growth, Ethena’s reliance on derivatives markets presents huge stability challenges. On October 10, 2025, during a global sell-off led by U.S. trade tensions, USDe’s price dropped to $0.65 before recovering.

The depeg event highlighted the model’s sensitivity to extreme market volatility and liquidity shortages. Santiment data indicated that Ethena’s redemption systems functioned throughout the event. However, renewed concerns arose about systemic risks in synthetic stablecoins.

Regulatory Clouds Gather: Can Ethena Navigate EU Pressure, Compete with USDC?

Adding to the stability concerns is growing regulatory pressure. Reports suggest European Union regulators have formally requested Ethena modify or even suspend certain operations, reflecting deep skepticism towards synthetic dollar mechanisms within the bloc’s developing stablecoin framework (MiCA).

This contrasts sharply with USDC, which benefits from Circle’s efforts to build robust compliance structures and gain regulatory acceptance globally.

Related: Ethena’s USDtb Becomes First Stablecoin With a Clear Path to US Compliance