Synthetic stability is back in the spotlight this year. This time, we have new confidence in financial engineering, designed to neutralize volatility through a delta hedge strategy.
On Wednesday, SUI Group, a publicly-provided company that offers exposure to the SUI blockchain, announced plans to launch Suiusde and USDI, known as the SUI ecosystem’s first native stubcoin. This initiative is being developed in collaboration with Ethena Labs and the SUI Foundation.
The two stub coins take a clear approach to maintaining the dollar peg. USDI will be fully supported by tokenized stocks in BlackRock’s USD Institutional Digital Liquitidity Fund (BUIDL), a regulated money market fund that holds cash equivalents with the short-term US Treasury Department.
In contrast, Suiusde uses the Delta-Neutral Hedging strategy to combine crypto collateral with short futures positions to become a synthetic dollar that stabilizes its value.
The partnership with Esena is worth noting. Ethena’s flagship product, USDE, is currently the largest synthetic dollar on the market. Maintain pegs through secured positions hedged in permanent futures contracts. This is a design that helped to gain traction as a capital-efficient alternative to Fiat collateral stubcoin.
According to Coinmarketcap, USDE is currently the third largest Stablecoin in the world, with a market capitalization of $14.8 billion, more than doubled since July.
The Ethena ecosystem is at the heart of a recent $2 billion shelving registration by Mega Matrix, a publicly-owned holding company that accumulates Ethena governance tokens (ENAs). Holding ENA allows you to expose the megamatrix to revenue generated through the USDE synthetic dollar protocol.
The introduction of native stubcoin could mark a critical step in SUI. SUI has emerged as one of the fastest growing layer 1 blockchains. Developed by Mysten Labs, SUI highlights parallel transaction processing for increased scalability and efficiency.
As of this week, SUI ranks as the 15th largest blockchain by market capitalization, just over $13 billion.
Related: Bank lobby is “panic” about stablecoins that support the harvest – Professor NYU
Stablecoin Market exceeds $300 billion
According to data from CoinmarketCap, the global Stablecoin market surpasses new milestones and exceeds the $300 billion circular value.
The synthetic, ridiculous stubcoins are expanding rapidly, but they still represent only a small share of the overall market.
The recent growth of this sector has been supported in part by US regulatory advances. The passing of the Genius Act – the law establishing preparation and reporting standards for Stablecoins, supported by fully secured dollars – is seen as a positive step in industry clarity and institutional adoption.
Despite growing competition, Tether’s USDT (USDT) and Circle’s USDC (USDC) continue to lead the market. USDT recorded a net inflow of $19.6 billion in the third quarter, with USDC of $12.3 billion and Ethena USDE at $9 billion, according to Industry data.
SUI is in the crowded Stablecoin Network Arena, and Ethereum still dominates the landscape.
Related: Crypto Biz: Wall Street Giants bet on Stubcoin