Ethena Allocates $46 Million Reserve Fund to Tokenized Assets, Including BlackRock's BUIDL and Sky's USDS

Ethena, a decentralized finance (DeFi) protocol, recently made an exciting announcement. They’re the issuer of the $2.5 billion yield-generating USDe "synthetic dollar" token. Now, they plan to invest their $46 million backup fund into several tokenized assets.

These investments include BlackRock's and Securitize's tokenized fund called BUIDL, Mountain's USDM token, Superstate's USTB, and the new USDS stablecoin from Sky, which was previously known as Maker.

The Reserve Fund will allocate about $18 million to BUIDL, $13 million to USDS, $8 million to USDM, and $7 million to USTB. This information comes from a post on their governance forum.

So, how does USDe work? It generates yield by holding spot bitcoin (BTC) and ether (ETH). At the same time, it shorts or sells equal amounts of BTC and ETH derivatives. This strategy allows Ethena to profit from the difference in funding rates. The allocation will help them earn yield on surplus funds from protocol revenues. This serves as a safety net when funding rates dip into negative territory.

Ethena’s move reflects a growing trend. Many DeFi platforms are shifting parts of their treasury assets into tokens backed by real-world assets (RWA). These can include U.S. short-term government bonds. This strategy helps them earn yields that are not tied to the ups and downs of crypto markets while still operating within the blockchain ecosystem. In fact, the tokenized Treasury market has tripled in size over the past year, reaching $2.2 billion, according to rwa.xyz data.

This decision follows Ethena's plans from July to invest its Reserve Fund in RWA-backed products. A total of 25 issuers applied for allocations, and the Ethena Risk Committee made the final selection. This committee consists of five voting members from DeFi risk and advisory firms, including Gauntlet, Block Analitica, Steakhouse, Llama Risk, and Blockworks Advisory. The Ethena Foundation acts as a non-voting member.

It's important to note that future funds in the Reserve Fund won’t be automatically invested in these products. Those decisions will be made separately, as clarified by an Ethena spokesperson in an email to CoinDesk.