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Frax Finance Enters DeFi Liquidity, Allocates $250M of Ethena Labs’ USDe 

Decentralized finance (DeFi) lending platform Frax Finance approved the community governance proposal to allocate $250M to a newly established liquidity pool. The proposal by Frax Finance will create one of the leading liquidity pools within DeFi. 

The DeFi lending protocol passed the proposal by the community governance that greenlighted the $250M worth of Ethena Labs’ USDe towards the liquidity pool. 

The allocation is a constituent of Frax Finance’s Singularity Roadmap. It constitutes the proposal to create the automated market operation (AMO).

The AMO will facilitate minting new FRAX tokens supported by overcollateralized debt. The community governance proposal secured approval on Friday, April 5.  

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Ethena Labs hailed the proposal approval as easing the creation of deepest liquidity pools within the DeFi space. It will enable Frax to diversify the yield backing, as Ethena Labs illustrated via the Monday, April 8 post on X. 

Ethena Labs disclosed that by Sunday, April 7, FRAX was accumulating USDe POL, aiming to create a deep pool of the dollar to boost on-chain liquidity. Ethena illustrated that doing so will facilitate FRAX in diversifying the source of the backing yield. 

The scrutiny of Curve Finance data reveals that the newly created Curve-based liquidity pool has nearly $45M in liquidity. The amount comprises almost $31M worth of FRAX coins and $14M in the USDe synthetic dollar.

Ethena Labs Total Value Locked (TVL) Hits Above $2 Billion

Ethena Labs has recently attracted interest across the DeFi community, reflecting its ballooning value lock since unveiling USDe on February 19. The total value locked in Ethena is $2.234 billion by Tuesday, April 9, barely two months since USDe unveiled on mainnet as per DefiLlama data.

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Ethena Labs protocol illustrates offering 37.1% in its annual percentage yield (APY) on the USDe to investors now above 125,000. The protocol attracted interest since announcing the addition of Bitcoin to back the USDe synthetic dollar. Doing so would further scale the USDe above its present $2 billion supply. 

Ethena Labs protocol prominence manifests in its journey to rank top earning decentralized application across the crypto platform by March 8. The protocol offered 67% APY on the USDe synthetic dollar, prompting the community to question its financial sustainability. 

The success attracted large investment funds, among them Delphi Venture, which placed the highest-conviction bet. Its chief executive, José Macedo, predicted that USDe could rank as the third largest dollar-pegged asset after the leading pair of Tether’s USDT and Circle’s USD Coin (USDC). 

Delphi Ventures’ founding partner indicated on April 2 that sUSDe harbors the potential to offer the highest dollar yield across the digital assets space. Macedo predicts that USDe is set to become the third largest stablecoin besides USDC and USDT in 2024. Also, he forecasts Ethena will realize the highest earning project across all crypto offerings. 

Ethena’s Integrating Bitcoin

Ethena Labs attracted the crypto community spotlight when it announced the integration of Bitcoin support to the USDe synthetic dollar. Ethena described the addition as necessary to help expand supply beyond the $2 billion. 

Ethena Labs’ march to the top earning charts of the decentralized application (DApp) within the digital assets space is evident. A key milestone is attracting interest from investment funds led by Delphi Ventures.  

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Ethena Labs successfully unveiled a new governance token, $ENA, that drew excitement from the crypto community. BitMEX former chief Arthur Hayes hailed the protocol’s milestone as it taps $ENA to enhance accessibility, security, and decentralization. 

The second season saw Ethana Labs issue 5% of the entire $ENA supply to holders of sUDe and USDe. The initiative is projected to extend for five months. 

Ethena Rallies to All-Time High

The increased investment interest in Ethena Labs is fueling the ENA rally above 20% to set an all-time high of $1.40 on Tuesday, April 9, as per CoinGecko data. The rally coincided with a 51% surge in trading volume to hit $1.597 billion in the past 24 hours to signal a rise in the token’s market activity. 

The accelerated activity witnessed on Ethena Labs protocol is behind the 158% rally from its lowest price of $0.5324 recorded on Tuesday, April 2. The rally has pushed the market cap to $1.934 billion, ranking 66 per CoinGecko data. 


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Stephen Causby

Stephen Causby is an experienced crypto journalist who writes for Tokenhell. He is passionate for coverage in crypto news, blockchain, DeFi, and NFT.

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