DeFi startup Ethena has successfully raised $6 million in a seed funding round, as it aims to revolutionize bond trading on the blockchain.
The funding round was led by blockchain-focused venture capital firm Dragonfly, with participation from BitMEX founder Arthur Hayes and his family office, Maelstrom. Additionally, major crypto derivatives exchanges Deribit, Bybit, OKX, Gemini, and Huobi, along with several venture capital and trading firms, also invested in the round.
Ethena, founded earlier this year, is focused on developing innovative financial solutions beyond traditional banking systems. The startup aims to address the global need for accessible, permissionless dollar-denominated savings instruments. Ethena is working on two groundbreaking products for international investors: a US dollar stablecoin and the world’s first digitally native savings bond.
The stablecoin developed by Ethena will operate independently of the traditional financial system and be fully collateralized and transparent. It will utilize a novel mechanism to maintain its peg to the US dollar. The stablecoin will achieve “delta-neutral” stability by hedging the price exposure through shorting Ethereum using perpetual swaps. This approach ensures that any losses or gains are effectively canceled out, allowing the stablecoin to maintain a constant peg of $1.
The savings bond, built on top of the stablecoin, functions similarly to a US treasury bond but without any ties to centralized banking institutions or government entities. Both the stablecoin and bond asset together will form a highly scalable digital currency and savings platform, offering a true alternative to traditional banking systems for users worldwide.
Guy Young, Founder and CEO of Ethena, expressed the importance of their mission, stating, “Ethena has been built to address the largest and most obvious immediate need within crypto. Through our novel stablecoin, we are realizing our vision for a crypto-native stablecoin that is not reliant on banking infrastructure, enabling the creation of a widely accessible and permissionless internet bond.”
The $6 million seed investment will enable Ethena to prepare for the launch of its stablecoin and bond asset in the third quarter of 2023. The company plans to complete the testnet phase, establish partnerships with industry leaders, and conduct smart contract audits to ensure the security and efficiency of the protocol.
Tom Schmidt, General Partner at Dragonfly, expressed excitement about Ethena’s breakthrough design, stating, “Ethena is building the holy grail of stablecoins: a coin that is truly stable, decentralized, and capital-efficient.” He further added, “We’re thrilled to be partnering with them to bring their vision to life.”
Ethena’s innovative approach to bond trading and its vision for a crypto-native stablecoin have attracted significant attention and support from the crypto capital markets ecosystem. Mr. Hayes, the inventor of the perpetual swap, remarked, “It is great to see the entire crypto capital markets ecosystem lining up behind Ethena to support its mission to bring a community-owned stablecoin to fruition.”
Ethena’s seed funding round builds upon previous investments and marks another milestone for the DeFi startup. The company aims to disrupt the traditional bond trading landscape by leveraging blockchain technology and creating accessible financial solutions for users worldwide.
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