As Bitcoin started the new week with gains, several altcoins also experienced notable upward movement. One standout in the market was Ethena (ENA), which saw a sharp price increase following a major announcement regarding Solana (SOL).

Ethena Proposes Solana

The Ethena community recently proposed adding Solana (SOL) and its staked versions (BNSOL and bbSOL) as reserve assets to support its stablecoin, USDe. This move aims to diversify the asset pool backing USDe, thus enhancing its effectiveness and utility in the DeFi space. If approved, Solana will join Bitcoin (BTC) and Ethereum (ETH) as collateral assets within the Ethena ecosystem. The proposal outlines a strategy for allocating Solana support, using the same hedging mechanism that Ethena currently applies to Bitcoin and Ethereum futures.

ENA Price Surge

Following the announcement, Ethena (ENA) saw a significant price increase, jumping by 17.7% to reach $0.40. This rise highlights the market’s positive reaction to the potential inclusion of Solana as a reserve asset.

What is USDe?

USDe differs from traditional stablecoins like Tether (USDT) or Circle (USDC) because it is a synthetic stablecoin. Unlike traditional stablecoins, USDe is not backed 1:1 by fiat assets. Instead, it maintains its peg to the US dollar by leveraging a cash-and-carry trade that uses large open-interest futures positions to hedge risk, supported by a reserve fund to manage volatility.

Ethena's move to expand its stablecoin's collateral pool could strengthen its position in the DeFi market, as reflected by ENA's positive market performance.