Ethena Migrates $1.5B BUIDL Collateral from Ethereum to Aptos, Avalanche, Polygon

Synthetic dollar issuer Ethena has migrated $1.5B worth of BUIDL – BlackRock's tokenized money market fund – off of the Ethereum L1. The tokens will continue to be used as collateral for USDtb, Ethena's treasury-backed stablecoin that is 100% reserved by BUIDL.

What's the Scoop?

• Chain Change: The little-publicized migration resulted in Ethena Labs bridging $1.5B of BUIDL from the Ethereum L1 to Aptos, Avalanche, and Polygon. Each chain received $500M of BUIDL, a massive increase considering that none of the chains held more than $54M prior to the transaction.
• New Custodian: As part of the effort to make USDtb a GENIUS Act compliant stablecoin, Ethena transferred full control over USDtb minting and redemption to Anchorage Digital Bank earlier this month.
• Avalanche Addition: On September 12, Ethena launched that USDe and sUSDe on Avalanche. Eligible DeFi interactions on Avalanche qualify for AVAX rewards as part of the launch, hinting at the potential of an (undisclosed) partnership between Ethena and Avalanche. The move mirrors Ethena’s February deployment of USDe on Aptos, which appeared contingent on exclusive token rewards deals with an Aptos lending market.

Bankless Take:

Tom Wan, Head of Data for Entropy Advisors, had two take aways from Ethena's BUIDL migration. First, if RWAs are held passively (i.e.; they are not being deployed to earn yield), the bar to switch to other networks is relatively low. Second, the consideration of network maturity is less important for RWAs, as the true backing lies offchain.

While Wan's conclusions are true for passive RWA holders without liquidity needs, the principle seems less true for Ethena, who must be able to access BUIDL reserves to process USDtb redemptions in a timely fashion.

Currently, 100% of USDtb supply exists on Ethereum, yet only 18% of BUIDL reserves exist on the same chain. This liquidity mismatch has the potential to be problematic during periods of market calamity. For example, should the Aptos blockchain go down (as many alt-L1s have in the past), $500M of USDtb collateral would be inaccessible, momentarily frozen in time and entirely unavailable for redemptions.