CZ’s Investment Fund Doubles Down on Ethena Stablecoin as YZi Labs Eyes External Capital

Major crypto players are placing big bets on stablecoin innovation—and the timing couldn't be more strategic.

Bullish Bets on Synthetic Dollars

Binance founder Changpeng Zhao's investment vehicle just amplified its position in Ethena's synthetic dollar protocol. The move signals deep conviction in algorithmic stablecoins despite the sector's turbulent history. Meanwhile, YZi Labs—known for its DeFi incubation prowess—is actively courting external capital to scale its operations.

Timing the Market Perfectly

Both developments hit during a period of renewed institutional interest in crypto infrastructure. Ethena's approach bypasses traditional banking dependencies, offering yields that make Treasury bills look sleepy. YZi's capital hunt suggests they're seeing pipeline opportunities that demand rapid scaling.

The Cynical Take

Because nothing says 'financial revolution' like VCs chasing the same synthetic yield plays that blew up spectacularly last cycle—but this time with better marketing decks.

TLDR

• YZi Labs, linked to former Binance CEO Changpeng Zhao, has doubled its investment in Ethena’s USDe synthetic stablecoin
• The $10 billion fund is considering opening to external investors after previously returning outside capital in 2022
• USDe differs from traditional stablecoins by using crypto backing and special strategies instead of fiat reserves
• The SEC recently requested a private demo of YZi Labs portfolio companies, showing increased regulatory openness
• YZi Labs manages over 230 portfolio companies including Aptos Labs, Polygon, and LayerZero

YZi Labs has increased its investment in Ethena’s USDe stablecoin project. The investment firm manages former Binance CEO Changpeng Zhao’s personal fortune and oversees a $10 billion portfolio.

The fund previously invested in Ethena but has now doubled its position. This move shows growing confidence in USDe’s synthetic dollar approach to stablecoin technology.

YZi Labs manages money for Zhao and early Binance insiders including co-founder Yi He. The fund has over 230 companies in its portfolio across crypto and Web3 projects.

Ethena’s USDe takes a different approach than traditional stablecoins like USDT or USDC. Instead of backing tokens with fiat currency reserves, USDe uses crypto assets and special strategies to maintain price stability.

This structure aims to reduce dependence on centralized banking partners. Traditional stablecoins can face risks from banking system freezes or political pressure on reserves.

Fund Considers Opening to External Investors

YZi Labs is exploring plans to accept outside capital and external investors. Fund head Ella Zhang told the Financial Times that external investor interest remains high.

The fund accepted about $300 million in outside funding in 2022. However, it later returned part of this capital due to the large scale of money already under management.

“We will eventually consider turning it into an external-facing fund,” Zhang said. “We just think it’s not there yet.”

The portfolio includes major crypto projects like Aptos Labs, Polygon, 1inch Network, and Sky Mavis. Infrastructure and security firms like LayerZero, Mysten Labs and CertiK are also backed by the fund.

Regulatory Climate Shows Signs of Change

The Securities and Exchange Commission recently requested a private demo of YZi Labs portfolio companies. This came after the SEC chair missed the fund’s demo day at the New York Stock Exchange.

Zhang sees this as evidence of a more crypto-friendly regulatory stance under the current administration. “Paul Atkins and other commissioners, they are very open-minded,” she said.

Atkins has served as SEC chair since April 2025. The regulatory shift comes as crypto investment funds see rising institutional demand.

Galaxy Digital raised $175 million for its first externally backed venture fund in June. This exceeded the initial $150 million target and shows growing appetite for crypto-native investments.

Zhao resigned from Binance after pleading guilty to a criminal charge over Anti-Money Laundering control failures. He served a four-month prison sentence and is seeking a presidential pardon.

Despite stepping down, Zhao remains Binance’s largest shareholder. His investment activities through YZi Labs continue to influence the crypto market landscape.