StablecoinX is debuting on Nasdaq through a merger with TLGY Acquisition Corp. This comes at a time when the supply of USDe has plummeted: since its October peak, it has dropped by about 70%. Back then, more than $14 billion was in circulation.
StablecoinX focuses on infrastructure for stablecoins and is betting on the Ethena ecosystem. After the deal closes, the company’s shares will start trading on Nasdaq as soon as Friday. The ticker is symbolic, USDE.
The company calls itself the first public infrastructure company for stablecoins focused on Ethena. StablecoinX plans to support the ecosystem through decentralized validator nodes and proprietary software solutions.
StablecoinX CEO Edward Chen believes that Ethena has become one of the key platforms for the next generation of digital dollars.
Listing on Nasdaq looks like a bold bet on the future of stablecoins. StablecoinX expects they will gradually become part of the core financial infrastructure. But the timing for the debut is challenging: the crypto market remains weak, and Ethena’s share of the stablecoin market is only about 1.4%. The majority of the market is still dominated by Tether and Circle.
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USDe does not work like traditional stablecoins such as USDT or USDC. It is a synthetic dollar asset with yield. Its peg to $1 is maintained not by direct dollar reserves, but by a derivatives strategy.
It is backed by collateral in bitcoin and Ether, as well as short futures positions in the same assets. This scheme is meant to smooth out volatility: gains and losses in positions partially offset each other.
But this model has a weak spot. It works better in a calm market and can fail when futures funding rates turn negative.
USDe Supply Continues to Decline
While the overall stablecoin market is growing, USDe is moving in the opposite direction. After its October peak, the token’s market cap fell by about 70% and now hovers around $4.5 billion.
That is still enough for USDe to remain the sixth-largest stablecoin by market cap, but the gap with market leaders remains large.
USDe supply has declined since the bull market peak. Source: CoinGecko.
StablecoinX also holds about 3 billion Ethena governance tokens ENA in its treasury. That is about 20% of the total supply. At current prices, the package is valued at about $275 million.
On Sunday, the company announced it had raised $360 million. These funds are planned to be used to buy ENA.
ENA itself is still weak. The token is now trading at around $0.08, which is 94% below its all-time high in April 2024.
The StablecoinX business is built around three areas. First, decentralized validator nodes DVN, which verify cross-chain messages for the Ethena ecosystem. Second, the software platform Stablecoin Harness. Third, distribution and integration services for products, which are still in development.
At StablecoinX they believe these areas should reinforce each other. But the company will have to prove this in a challenging market environment.
Crypto SPAC companies and firms with crypto reserves have struggled this year. Since October, the crypto market cap has dropped by about 52%, and about $2.3 trillion has left the sector. Investor interest in digital assets has noticeably declined.
Shares of TLGY Acquisition Corp also fell before the deal closed. According to Google Finance, on Thursday the company’s shares on the OTC market lost 6.93% and closed at $9.40.
