Crypto Journalist
Anas Hassan
Crypto Journalist
Anas Hassan
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YZi Labs, formerly known as Binance Labs, has deepened its stake in Ethena Labs as USDe hits $13 billion TVL.
The $10 billion investment arm is backing the protocol behind the third-largest USD-denominated crypto asset amid mounting regulatory scrutiny and rapid institutional adoption of the synthetic, yield-bearing digital dollars.
USDe achieved the fastest growth trajectory to cross the $10 billion milestone in crypto history, surpassing established players like Tether’s USDT and Circle’s USDC in terms of adoption.
YZi Lab’s renewed commitment aims to fund USDe integration across centralized exchanges, DeFi platforms, and BNB Chain expansion, as well as the development of new products, such as USDtb, a GENIUS Act-compliant stablecoin, and Converge, an institutional settlement layer.
YZi’s Doubles Down on Ethena’s Synthetic Dollar Vision
YZi originally backed Ethena through its Season 6 Incubation Program in February 2024, before the public launch, when the protocol was proving its crypto-native synthetic dollar concept.
Nicola Wang, Investment Director of YZi Labs, noted that the company was drawn to Ethena’s unique stablecoin design that generates yield through crypto-native mechanisms rather than traditional banking relationships.
Since YZi’s initial investment, Ethena has established more presence on the BNB Chain following the April deployment, with new money markets, protocol integrations, and ecosystem partnerships underway.
The renewed backing will advance the development of USDtb, a fiat-backed stablecoin pursuing GENIUS Act compliance, and Converge, an institutional settlement layer developed in collaboration with Securitize and BlackRock’s tokenization partners.
“Since our investment team first met Guy in late 2023 and backed Ethena in early 2024, Ethena has become the category definer for yield-bearing synthetic dollars,” added Dana Hou, Investment Partner at YZi Labs.
Current DeFiLlama data shows Ethena’s protocol holding more than $13 billion in total value locked, while ENA tokens trade around $0.67 with a market capitalization of nearly $4.59 billion.
Regulatory Headwinds Test Synthetic Stablecoin Resilience
Ethena’s rapid growth has also faced significant obstacles, particularly in European markets where regulatory pressure mounted over its synthetic dollar structure.
Earlier this year, German financial regulator BaFin forced Ethena to implement a 42-day redemption plan following a regulatory standoff over violations of the EU’s Markets in Crypto-Assets Regulation.
The dispute centered on BaFin’s concerns about sUSDe, the yield-bearing version of USDe, which regulators flagged as potentially constituting an unregistered security under German law.
Following sustained pressure, Ethena withdrew from German operations on August 6 and abandoned its MiCAR authorization application, transferring German users to its British Virgin Islands-based entity.
This European regulatory friction contrasts sharply with recent momentum in other markets, including a July $360 million funding round that drove ENA tokens up 21% to six-month highs.
The protocol’s resilience during the German episode, maintaining full backing through offshore entities, may have reinforced YZi’s confidence in Ethena’s operational adaptability.
Synthetic Stablecoins Challenge Traditional Dollar Frameworks
YZi’s expanded support is part of a broader institutional capital flow toward synthetic, yield-bearing stablecoins as traditional fiat-backed alternatives face limitations in generating sustainable returns for holders.
Ethena’s delta-neutral hedging approach allows it to capture yield from crypto markets while maintaining dollar stability, differentiating it from bank-backed stablecoins that rely on traditional financial infrastructure.
This model has attracted backing from major investors, including Dragonfly, Fidelity, Franklin Templeton, and several prominent crypto exchanges, while generating cumulative revenue exceeding $500 million by August.
The positioning builds on stablecoin market momentum, with Treasury Department projections suggesting the sector could exceed $2 trillion by 2028.
Notably, the recent passage of the Trump-backed GENIUS Act aims to further solidify the dollar’s dominance by supporting dollar-pegged stablecoins in global markets.
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