Athena Labs received $14 million in funding for the project
Financial instruments pegged to the US dollar provide a new frontier for overseas markets. That's the bet of Athena Labs, a startup that's getting $14 million in funding for an Ethereum-based synthetic dollar.
Athena Group announced the funding on February 16, backed by venture capital firm Dragonfly, among other investors. In the year The early investment startup in 2023 raised $6 million from Binance Labs, Gemini, Bybit, Mirana Ventures, OKX Ventures and Deribit to launch decentralized financial solutions built on the Ethereum network.
Capital supports USD, supported by delta-hedging strategies, using staked Ether (ETH) as collateral. According to data obtained by Defilama, the production has locked in a total of $200 million since its launch in December.
“USDe” uses perpetual swaps to achieve delta-neutral stability USDe hedges the speculation by shifting user-supplied assets to US dollars by delta-hedging assets to achieve “delta-neutral” stability.
In other words, USDe maintains its peg to the dollar by combining hedging strategies. It uses financial derivatives such as arbitrage and perpetual swap contracts to ensure that the value of the digital currency does not change against the dollar, a different approach than traditional stablecoins that use direct guarantees or algorithmic methods to maintain their value.
“We believe stablecoin is the single most important tool in crypto and the single most promising product with over $130 billion in global demand,” said Guy Young, CEO of Athena Labs.
For example, leading stablecoin distributor Tether Holdings Ltd. posted a “record-breaking net profit” of $2.85 billion in the last quarter of 2023, including the proceeds from Tether (USDT) holdings, including around $1 billion in interest from US Treasury securities. , which backs up most of the stablecoin assets.
“The entire space is based on a centralized stablecoin backed by collateral that resides in the banking system – providing a crypto-native synthetic dollar alternative is the biggest opportunity in the space in our view.”
However, having delta-hedging does not mean that the synthetic dollar is risk-free. Liquidity and collateral risks are always around the corner in times of market stress and unexpected events. To mitigate such concerns, the startup claims to be secured by institutional-grade organizations such as Firewalls, Copper, and BitGo.
“Stablecoins have grown in popularity over the past few years for providing USD-denominated savings and transfers to people around the world, but they have always been handicapped by these three issues. [stability, censorship and capital efficiency]Dragonfly's general partner Tom Schmidt called the synthetic product “the holy grail of cryptocurrencies.”
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