StablecoinX Merges with TLGY Acquisition Corp, Debuts on Nasdaq

Stablecoin infrastructure company StablecoinX has completed its merger with TLGY Acquisition Corp, a publicly traded special purpose acquisition company, allowing it to begin trading on Nasdaq on Friday.

StablecoinX is the first public stablecoin infrastructure company focused on supporting the Ethena ecosystem through decentralized verifier nodes and software infrastructure, and will trade under the symbol “USDE,” according to a statement on Thursday.

“We believe Ethena has emerged as one of the most important platforms powering the next generation of digital dollars,” said Edward Chen, CEO and Chairman of StablecoinX.

The Nasdaq debut is a big bet that stablecoins are becoming the plumbing of global finance, and comes despite a broader crypto bear market and Ethena’s relatively small 1.4% market share of the stablecoin market compared with those offered by its competitors, such as Tether and Circle.

Ethena’s USDe is a yield-bearing synthetic dollar-pegged stablecoin. Unlike USDt (USDT) or USDC (USDC), which are backed by actual dollars, USDe (USDE) maintains its $1 peg through a derivatives strategy.

It is backed by crypto collateral in Bitcoin and Ether and short futures positions on those same assets, enabling the long and short positions to cancel out the price volatility, helping to keep its value at approximately $1.

Ethena’s delta-neutral strategy works well in normal markets but is vulnerable during periods when futures funding rates go negative.

USDe supply falls

While stablecoin circulation has grown in recent years, USDe market capitalization has declined by 70% since its peak in October to around $4.5 billion today, ranking it sixth among stablecoins.

USDe supply has fallen since the bull market peak. Source: CoinGecko

StablecoinX’s treasury also holds approximately 3 billion Ethena governance tokens (ENA), or around 20% of the total supply, valued at approximately $275 million. The company announced a $360 million capital raise to purchase ENA on Sunday.

However, the asset is currently trading at $0.08, down 94% from its April 2024 all-time high.

Related: Yield-bearing stablecoins surge as Washington fights over yield

The company has three business lines: a decentralized verifier node (DVN) serving as a cross-chain message verifier for the Ethena ecosystem, a middleware software stack called “Stablecoin Harness” and distribution services, which are currently in development.

The company says the three businesses reinforce one another, though the broader crypto bear market presents a challenging backdrop for its Nasdaq debut.

Crypto SPACs and crypto treasuries have had a tough time this year as the broader market has tanked 52%, with $2.3 trillion leaving the space since October and crypto falling out of favor among investors.

Pre-merger TLGY fell 6.93% on Thursday on OTC markets to end the day trading at $9.40, according to Google Finance data.