Ethena has partnered with Bybit, a global cryptocurrency exchange, to integrate its synthetic dollar asset, USDe, which launched almost three months ago.

USDe will now be accepted as collateral for trading perpetual futures on Bybit’s platform. The integration could allow users to earn a yield on their collateral, a feature not commonly offered with other stablecoins like USDT, which dominate the market without providing direct incentives for holders.

Learn more: What Is Ethena’s USDe Synethic Dollar? A Beginner’s Guide

Bybit users can now use USDe to trade a variety of assets within the Bybit Unified Trading Account (UTA), including BTC, ETH, and SOL. The integration also includes the addition of BTC/USDe and ETH/USDe spot pairs and the inclusion of USDe in Bybit’s “Earn” platform, where users can participate in launchpool farming for upcoming token launches.

The initiative comes at a crucial time for USDe, which, despite a strong start, has seen its growth slow down in recent weeks. Initially, USDe rapidly achieved a market cap of $2.39 billion but has remained stagnant over the past month, sitting now at around $2.29 billion. This plateau coincides with geopolitical tensions and a downturn in the cryptocurrency market, impacting the demand for leveraged positions—a key driver of USDe’s early rapid growth.

Guy Young, the founder and CEO of Ethena Labs, hinted that this would happen on an episode of the Unchained podcast last month. “I think people don’t appreciate the actual size of the market for just using USDT on perpetuals on CEXs,” he told Laura Shin. “For some of the more capital-focused firms who are really focusing on efficiency, that’s a really big deal for them to sort of capture that yield while they trade.”

USDe’s collateral currently sits in several leading cryptocurrency exchanges including Binance, Bybit, Deribit, OKX, and Bitget, which play a crucial role in its ecosystem. Notably, Bybit, despite being the first among these to integrate USDe as a collateral option, holds only 7% of USDe’s collateral. This suggests that while Bybit is pioneering this initiative, the relatively small percentage of collateral it holds indicates that there is substantial room for further integration. It’s likely that similar collaborations could soon be announced with other partners, expanding USDe’s utility and presence across more platforms.

“Ethena’s vision is to ultimately provide neutral dollar infrastructure to all of the major trading venues in the space,” Young told Unchained via Telegram.

Historically, more than $20 billion in non-yielding USD-denominated assets have been used as collateral in the crypto market, without offering financial benefits to the holders. This partnership could change that dynamic by allowing traders to offset some of their funding costs using USDe. 

Young said in a press release that this integration with Bybit could challenge the current stablecoin market and is aimed at crypto-native users. Offering USDe as collateral on Bybit will unlock USDe’s next wave of growth, further challenging the existing stablecoin hegemony with a tailored product purpose-built for crypto-natives.”