This year, synthetic stablecoins are gaining renewed attention, focusing on financial engineering that aims to reduce volatility using delta-hedged strategies.
On Wednesday, SUI Group, a publicly listed entity providing access to the Sui blockchain, revealed plans to introduce suiUSDe and USDi, touted as the first native stablecoins within the Sui ecosystem. This initiative is being developed in collaboration with Ethena Labs and the Sui Foundation.
The two stablecoins employ different strategies to maintain a dollar peg. USDi will be entirely backed by tokenized shares of BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL), a regulated money market fund that includes short-term US Treasurys and cash equivalents.
In contrast, suiUSDe will be a synthetic dollar utilizing a delta-neutral hedging approach, integrating crypto collateral with short futures positions to stabilize its value.
The collaboration with Ethena is significant. Ethena’s primary offering, USDe, is currently the largest synthetic dollar available. It sustains its peg through collateralized positions hedged with perpetual futures contracts — a framework that has made it a capital-efficient option compared to fiat-backed stablecoins.
As per CoinMarketCap, USDe is now the third-largest stablecoin in the world, boasting a market cap of $14.8 billion, having more than doubled since July.
Ethena’s ecosystem is currently at the center of Mega Matrix’s recent $2 billion shelf registration, a publicly traded holding company that has been acquiring Ethena’s governance token (ENA). Owning ENA may expose Mega Matrix to revenues from the USDe synthetic dollar protocol.
The launch of native stablecoins could represent a pivotal moment for Sui, which has become one of the fastest-growing layer 1 blockchains. Developed by Mysten Labs, Sui focuses on parallel transaction processing to enhance scalability and efficiency.
As of this week, Sui is ranked as the 15th-largest blockchain by market capitalization, valued at just over $13 billion.
Related: Bank lobby is ‘panicking’ about yield-bearing stablecoins — NYU professor
Stablecoin market exceeds $300 billion
The global stablecoin market has achieved a new milestone, surpassing $300 billion in total circulating value, according to CoinMarketCap data.
While synthetic stablecoins are experiencing rapid growth, they still account for a modest portion of the overall market, which is predominantly composed of traditional, fully collateralized tokens.
The recent expansion in the sector has been partly supported by regulatory advancements in the United States. The enactment of the GENIUS Act — legislation that establishes reserve and reporting standards for fully collateralized dollar-backed stablecoins — has been perceived as a favorable step towards industry clarity and institutional acceptance.
Despite increasing competition, Tether’s USDt (USDT) and Circle’s USDC (USDC) continue to dominate the market. USDt reported $19.6 billion in net inflows during the third quarter, followed by USDC with $12.3 billion and Ethena’s USDe with $9 billion, according to industry statistics.
Sui is entering a competitive stablecoin network arena, with Ethereum still leading the market — hosting over half of all stablecoins in circulation.
Related: Crypto Biz: Wall Street giants bet on stablecoins
