Ethena’s synthetic dollar, USDe, achieved a remarkable market cap of $2.39 billion just two months after its launch in mid-February. However, it has experienced no growth over the past three weeks.

Ethena introduced USDe as part of its “Internet Bond” solution, aiming to solve the problem commonly known as the “stablecoin trilemma”– the challenge of achieving scalability, stability, and decentralization simultaneously. Unlike conventional fiat stablecoins, USDe is backed by a mix of crypto assets and short futures positions, offering a crypto-native approach to the stablecoin challenge.

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

USDe was the fastest stablecoin ever to reach a $2 billion market cap, hitting a high of $2.39 billion on April 13. Its market cap currently stands at $2.31 billion, however. Over the same period since April 13, the total stablecoin market capitalization has risen from $155 billion to $159.5 billion. 

The stagnation in USDe’s market cap growth can be traced back to the weekend that geopolitical unrest escalated with Iran’s attack on Israel, sparking fears of a wider conflict. This event shook global markets, affecting cryptocurrencies including bitcoin, which since then has fallen from $69,000 to $57,000, reducing the demand for leveraged positions in the crypto market—a key driver of USDe’s initial rapid growth.

However, Ethena’s founder Guy Young is not concerned. He told Unchained that this plateau in USDe’s growth was anticipated. “USDe supply is quite reflexive to the market demand for leverage — following the large open interest reset and liquidations a few weeks ago, funding has normalized,” Young said. 

He also expressed satisfaction with how USDe managed to maintain its peg and not devalue during the crisis, viewing it as a successful “first stress test” for the new currency.

The initial high demand for leveraged positions enabled Ethena to offer attractive yields, with USDe yielding as high as 31.9% before the market turnaround. However, as market interest waned and bitcoin’s price dropped, these yields have now adjusted to around 10%, which may be another reason why USDe’s growth has slowed down.

“Ethena has a yield problem, and it is not the kind you expect. It has $2.37B and is roughly 20% of ETH [open interest]. This is already the upper limit of what something like Ethena will be able to do before the music stops and it is forced to adapt,” wrote crypto investor Diogenes Casares on X. 

Read more: As Ethena’s USDe Quickly Reaches $2 Billion in Market Cap, Some Wonder If It’s as Risky as Terra’s UST

However, another user, investor @0xEricuuuh, pointed out USDe’s resiliency: “We’ve now had sustained periods of low/negative funding and the protocol has stayed rock steady.”

Meanwhile, Ethena’s “sats” campaign, its points program, continues to gain traction. This campaign marks the second season of the program and is set to culminate in another airdrop. The campaign will conclude on either Sept. 2 or when USDe reaches a $5 billion market cap, whichever occurs first. Users can earn sats through various activities such as providing liquidity in DeFi pools, locking the governance token ENA, or making deposits to Pendle Finance, which is mainly used to leverage sats.