FalconX and Ethena have set up a $1 billion secured lending facility that will put assets backing Ethena’s $USDe to work in institutional credit, expanding the synthetic dollar protocol beyond crypto-native trades.
The facility will finance overcollateralized loans originated by digital-asset prime broker FalconX for uses including trading strategies, corporate treasury management and payments, according to an emailed announcement on Wednesday.
The arrangement offers a potentially steadier source of returns for Ethena than perpetual-futures funding rates, a key component of the basis trades underpinning $USDe. Those rates can compress or turn negative when demand for leveraged crypto exposure fades, reducing the returns available from the strategy.
The $1 billion commitment, therefore, represents another step in Ethena’s effort to diversify how the assets behind $USDe generate returns, while also putting crypto-native liquidity to work in a form of credit more commonly supplied by banks and other traditional lenders.
The FalconX loans will be overcollateralized, with collateral held at qualified third-party custodians and Ethena holding a first-priority security interest over the vehicle’s assets.
