Ethena Labs, the developer of the synthetic dollar protocol, has integrated Bitcoin (BTC) as a backing asset for its USDe stablecoin, which is the primary offering from the firm.

The announcement was made on a particular social media platform, X, where Ethena Labs highlighted the importance of using Bitcoin to support USDe. This integration is expected to greatly enhance the scalability of USDe from its current $2 billion supply.

USDe is designed as a stablecoin that is resistant to censorship and maintains its backing on-chain by using delta-hedging staked Ethereum (ETH) as collateral. This mechanism is referred to as an "Internet Bond."

The innovative "Internet Bond" combines yield from staked Ethereum with funding and basis spread from perpetual and futures markets to create an on-chain crypto-native "bond" that serves as a dollar-denominated savings tool for users in approved jurisdictions.

From Ethena Labs' perspective, Bitcoin's substantial liquidity and higher open interest on exchanges make it a superior choice for backing and expanding USDe in comparison to Ethereum. The growth of BTC open interest on major exchanges (excluding the Chicago Mercantile Exchange) from $10 billion to $25 billion in a year, as opposed to the growth from $5 to $10 billion for ETH, further cements this decision.

While BTC lacks a native staking yield like staked ETH, its derivative markets are advancing at a faster rate, providing better scalability and liquidity for delta hedging. In the current market environment, focusing on the scalability of USDe is deemed ideal.

The incorporation of Bitcoin as a backing asset for USDe is now visible on Ethena's live dashboard.