Elixir’s deUSD is backed by a delta-neutral ETH place, accumulating Ether staking rewards and brief funding charges to pay out yield to holders.
Ethena will quickly face competitors from rival stablecoin issuers constructing on its novel yield-generation mechanism.
On July 31, Elixir Labs unveiled deUSD, a “synthetic U.S. dollar asset” claiming to comprise a extra decentralized different to Ethena’s USDe. Elixir is focusing on September for the deUSD’s mainnet launch.
DeUSD will deploy on the Elixir community, which facilitates liquidity for decentralized orderbook exchanges. The Elixir community attracted a $300 million complete worth locked (TVL) since launching its Apothecary factors program three months in the past. Customers earn factors in trade for minting elxETH, an Ether-backed token supported by a number of decentralized orderbook exchanges together with dYdX, Vertex, and SynFutures.
The 70,000 staked ETH backing exlETH will probably be used to collateralize deUSD alongside ETH shorts to create a delta-neutral place. As such, the token derives yield from staking rewards and brief funding charges.
“The network Elixir has built and stress-tested over the past 2 years is well suited to power a truly decentralized synthetic stable asset,” mentioned Philip Forte, Founder and CEO of Elixir Labs. “DeUSD has been built with transparency and resiliency as its core features, removing dependency from basis-related market trends and unstable sources of yield.”
Elixir mentioned it additionally has $1 billion in liquidity “lined up” to again deUSD, and will help different property as collateral sooner or later as effectively.
Customers can even stake deUSD to earn extra liquidity supplier incentives on high of yield from the token’s underlying foundation place.
Elixir versus Ethena
Elixir’s deUSD takes inspiration from and seeks to compete with Ethena’s USDe stablecoin.
USDe pioneered combining staked ETH publicity hedged towards a delta-neutral brief place to derive yield from each brief funding charges and Ether staking. USDe’s present annual charge of return sits at 11%, though Ethena initially claimed USDe might provide yields exceeding 20%.
Nevertheless, some analysts warn that USDe’s yield mechanism might not be sustainable in an surroundings of extended bearish momentum.
Elixir claims that deUSD is much less uncovered to adverse funding charges than USDe, asserting the token’s worth stays secure in instances of “extreme negative funding” by reducing its basis trade exposure and investing in U.S. treasuries via MakerDAO’s sDAI. Conversely, as the profitability of basis trading returns to higher levels, deUSD’s exposure to funding rates will increase.
Elixir also claims greater decentralization than USDe, combining “decentralized execution with verifiable proof of execution, open-source code, and liquidity” in a non-custodial and on-chain fashion free from centralized parties.
Pendle, the leading yield tokenization, has pledged to support deUSD by launching yield and principal tokens for the stablecoin. Pendle is also tokenizingElixir’s Apothecary points program, dubbed “potions.”
Apothecary users can now commit to either minting deUSD or withdrawing their ETH deposits when support from decentralized exchanges goes live.
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