Synthetic stablecoins are regaining visibility this year, driven by advancements in financial strategies to mitigate volatility through delta-hedged methods.

On Wednesday, SUI Group, a public entity linked to the Sui blockchain, declared its intention to introduce suiUSDe and USDi, which are touted as the first native stablecoins in the Sui ecosystem. This endeavor is in collaboration with Ethena Labs and the Sui Foundation.

The two stablecoins adopt unique strategies to uphold their value in dollars. While USDi will be entirely secured by tokenized shares of BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL), a regulated money market fund that invests in short-term US Treasurys and cash equivalents, suiUSDe will be a synthetic dollar leveraging a delta-neutral hedging strategy that integrates cryptocurrency collateral with short futures positions to stabilize its price.

Ethena’s flagship token, USDe, stands out in the market as the leading synthetic dollar, maintaining its peg through collateralized positions that are hedged with perpetual futures contracts, which has contributed to its acceptance as a more capital-efficient alternative to traditional fiat-backed stablecoins.

According to CoinMarketCap, USDe has ascended to be the third-largest stablecoin globally, boasting a market capitalization of $14.8 billion, which has more than doubled since July.

Image

The Ethena USDe market cap has surged in recent months. Source: CoinMarketCap

Ethena features prominently in a recent mega $2 billion shelf registration announced by Mega Matrix, a publicly traded holding company that has been acquiring Ethena’s governance token (ENA). Possessing ENA may provide Mega Matrix access to revenues generated through the USDe synthetic dollar protocol.

The advent of native stablecoins represents a crucial milestone for Sui, which has rapidly ascended as one of the most buoyant layer 1 blockchains. Created by Mysten Labs, Sui prioritizes parallel transaction processing to enhance scalability and performance.

This week, Sui has positioned itself as the 15th-largest blockchain by market value, estimated at just over $13 billion.

Related: Bank lobby is ‘panicking’ about yield-bearing stablecoins — NYU professor

Stablecoin Market Surpasses $300 Billion

The global stablecoin sector has attained a new benchmark, exceeding $300 billion in total circulating value, as reported by CoinMarketCap data.

Although synthetic stablecoins are on the rise, they still account for a minor portion of the overall market, dominated mainly by traditional fully-collateralized instruments.

Recent growth in this sector has been partly fueled by regulatory advancements in the US. The GENIUS Act’s passage, which establishes reserve and reporting standards for fully collateralized dollar-backed stablecoins, is perceived as a favorable development for industry clarity and institutional engagement.

In the face of increased competition, Tether’s USDt (USDT) and Circle’s USDC (USDC) remain at the forefront of the market. USDt recorded net inflows of $19.6 billion in the third quarter, followed by USDC with $12.3 billion and Ethena’s USDe with $9 billion, as per industry statistics.

Image

Stablecoin inflows over the last 90 days. Source: RWA.xyz

Sui is entering a competitive stablecoin landscape, with Ethereum maintaining its lead, hosting over half of all circulating stablecoins.