Synthetic dollar (delta-neutral)
A synthetic dollar is a token that targets a stable dollar value through a hedged portfolio rather than dollar reserves alone. Ethena calls USDe 'a crypto-native synthetic dollar': it holds spot assets and hedges their price risk with derivatives such as perpetual contracts, giving a 'delta-neutral' backing, alongside stablecoins and short-duration real-world assets that need no hedge. Ethena names funding risk: funding rates can turn negative, so it may have to pay rather than earn.
What the sources say
| Source | Quote | Link |
|---|---|---|
| Ethena docs, How USDe Works: description | "A crypto-native synthetic dollar utilizing spot assets as backing, onchain custody, and centralized liquidity venues" | docs.ethena.fi |
| Ethena docs, How USDe Works: delta-neutral backing | "Stable assets held within the portfolio - liquid stablecoins and short-duration real-world assets - already hold a stable dollar value and require no hedge. The combined position is a delta-neutral backing whose synthetic dollar value remains relatively stable across most market conditions." | docs.ethena.fi |
| Ethena docs, Funding Risk | "Given Ethena uses derivatives positions, such as perpetual contracts, to hedge the delta of the backing assets, the protocol is exposed to "Funding Risk". "Funding Risk" relates to the potential of persistently negative funding rates. Ethena is able to earn revenue from funding, but could also be required to pay funding." | docs.ethena.fi |
| Ethena docs, How USDe Works: short perpetual hedging positions | "Ethena delegates, but never transfers custody of, backing assets to derivatives exchanges to margin the short perpetual hedging positions." | docs.ethena.fi |
Note on sources
No regulator text defines "synthetic dollar". Both sources are Ethena's own documents.
Related terms
See also
Checked against the sources on 2026-11-01.