Frax Finance, a decentralized finance (DeFi) lending protocol, recently passed a community governance proposal allowing a $250 million allocation of Ethena Labs’ USDe to a new liquidity pool. Approved on April 5, this move is part of Frax’s Singularity Roadmap and enables the creation of an automated market operation (AMO) for minting new FRAX tokens backed by overcollateralized debt.
The approved proposal is set to create one of the deepest liquidity pools in the DeFi space, facilitating Frax’s ability to diversify its backing yield. Ethena Labs highlighted this development, noting that the inclusion of USDe POL will significantly deepen the on-chain dollar liquidity pool.
Ethena Labs, the creator of USDe, reached a milestone by surpassing $2 billion in total value locked (TVL) on April 6, less than two months after the mainnet launch of USDe. Currently offering a 37.1% annual percentage yield (APY) on USDe to over 125,300 investors, Ethena Labs has attracted attention in the crypto space.
Ethena Labs recently announced plans to add Bitcoin backing to USDe, aiming to scale further from its current $2 billion supply. Recognized as the highest-earning decentralized application in crypto, Ethena Labs has gained attention from large investment funds, including Delphi Ventures, which considers it a high-conviction bet for the current cycle.
According to José Maria Macedo, CEO of Delphi Labs, USDe is poised to become one of the largest dollar-backed assets in the crypto market, rivaling stablecoins like USDT and USDC. Macedo predicts that Ethena Labs will become the highest revenue-generating project in the entire crypto industry, highlighting the potential impact of USDe’s high dollar yield at scale.
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