Elixir’s deUSD is backed by a delta-neutral ETH place, accumulating Ether staking rewards and quick 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 “artificial U.S. greenback asset” claiming to comprise a extra decentralized various 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 change 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 shall be used to collateralize deUSD alongside ETH shorts to create a delta-neutral place. As such, the token derives yield from staking rewards and quick funding charges.
“The community Elixir has constructed and stress-tested over the previous 2 years is nicely suited to energy a really decentralized artificial secure asset,” mentioned Philip Forte, Founder and CEO of Elixir Labs. “DeUSD has been constructed with transparency and resiliency as its core options, eradicating dependency from basis-related market tendencies and unstable sources of yield.”
Elixir mentioned it additionally has $1 billion in liquidity “lined up” to again deUSD, and should assist different belongings as collateral sooner or later as nicely.
Customers also can stake deUSD to earn extra liquidity supplier incentives on prime 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 quick place to derive yield from each quick funding charges and Ether staking. USDe’s present annual price of return sits at 11%, though Ethena initially claimed USDe might supply yields exceeding 20%.
Nevertheless, some analysts warn that USDe’s yield mechanism might not be sustainable in an atmosphere of extended bearish momentum.
Elixir claims that deUSD is much less uncovered to detrimental funding charges than USDe, asserting the token’s worth stays secure in instances of “excessive detrimental funding” by decreasing its foundation commerce publicity and investing in U.S. treasuries by way of MakerDAO’s sDAI. Conversely, because the profitability of foundation buying and selling returns to increased ranges, deUSD’s publicity to funding charges will enhance.
Elixir additionally claims higher decentralization than USDe, combining “decentralized execution with verifiable proof of execution, open-source code, and liquidity” in a non-custodial and on-chain style free from centralized events.
Pendle, the main yield tokenization, has pledged to assist deUSD by launching yield and principal tokens for the stablecoin. Pendle can also be tokenizingElixir’s Apothecary factors program, dubbed “potions.”
Apothecary customers can now decide to both minting deUSD or withdrawing their ETH deposits when assist from decentralized exchanges goes stay.
Associated: BlackRock’s BUIDL Eyes Main Funding from Ethena Labs
