Ethena has rapidly established itself as a central player in the stablecoin market, combining a yield-generating synthetic dollar (USDe) and an institutional version backed by BlackRock's BUIDL fund (USDtb).
But behind this innovative architecture, between delta-neutral strategy, institutional integration and plans to list on Nasdaq, the protocol remains exposed to structural fragilities that could prove decisive in the next market cycle.
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A model based on delta-neutral stability Ethena's operations are based on a delta-neutral strategy: every deposit in assets (ETH, BTC, SOL, BNB, LSTs, stablecoins) is covered by an equivalent short position on derivatives markets. Exposures are split between Binance, Bybit, OKX, Deribit and, since summer 2025, Coinbase International.
This mechanism has enabled the protocol to maintain a hedge ratio close to 100%. The return generated is distributed via sUSDe, fed by funding rates and liquid staking income. In parallel, the introduction of USDtb, backed by BlackRock's BUIDL tokenised fund, has offered institutions a more readable and compliant stablecoin.
A reserve protected by off-exchange settlements One of Ethena's key innovations concerns the management of its reserves and the way they are secured. The protocol increasingly relies on off-exchange settlements via the ClearLoop infrastructure, developed by Copper.
In practical terms, this mechanism separates collateral from the risk associated with centralised platforms. The funds deposited by Ethena are not held directly in the accounts of the exchanges used to hedge positions (Binance, Bybit, OKX, Deribit, Coinbase International). They are kept in segregated portfolios, controlled by Copper, and can only be mobilised to execute specific transactions.
The advantage is twofold: in the event of an exchange default, the collateral remains intact and returnable; at the same time, positions can be hedged with the same efficiency as a conventional deposit. ClearLoop thus reduces counterparty risk, a vulnerability long pointed out as the Achilles heel of delta-neutral strategies.
During the ByBit hack in February 2025 ($1.5 billion), Ethena suffered no losses thanks to this mechanism.
This architecture also enables capital optimisation: collateral can be reused quickly to open or close positions, while remaining isolated from the balance sheets of trading platforms. For Ethena, whose solidity is based on hedge reliability, this system is an essential building block.
>> Ethena (ENA): Analysis of the USDe stablecoin issuer
Two products, two approaches to the dollar on-chain Ethena builds its offering around two complementary stablecoins: USDe and USDtb.
The USDe is a synthetic dollar, designed as a crypto-native asset. It is based on a delta-neutral strategy: for each deposit in assets (ETH, BTC, SOL, BNB, LSTs or stablecoins), the protocol opens an equivalent short position on the derivatives markets. This hedge maintains parity with the dollar and generates a return redistributed via the sUSDe, used as a savings product in the DeFi. With more than 12 billion dollars in circulation, the USDe has become the third-largest stablecoin on the market in just a few months.
The USDtb, launched at the end of 2024, adopts a different logic. It is a fiat-backed stablecoin, backed by dollar reserves invested in BlackRock's BUIDL tokenised fund, via Securitize. This choice makes it a product designed for institutions, with parity guaranteed by direct convertibility and 24/7 atomic exchanges between USDtb and BUIDL. Since July 2025, onshore issuance in the United States via Anchorage Digital Bank has brought it within the regulatory framework of the GENIUS Act , enhancing its attractiveness to traditional investors.
These two products reflect Ethena's dual ambition: to offer a native and remunerative dollar for crypto users, while building an institutional offering in line with traditional finance standards.
The weight of USDe and USDtb - Source: entropy_advisors/Dune A business model based on native yield Ethena's appeal is largely based on the yield generated by its synthetic stablecoin, the USDe. Users can deposit their tokens in the StakedUSDe contract and in exchange receive sUSDe, a token that gives them access to the protocol's revenues.
These revenues come from three main sources:
funding rates and basis spreads from derivative hedging positions, which are particularly remunerative during periods of high demand for long leverage; yields from liquid staking, via assets such as Lido's stETH, representing around 6% of reserves, with an average net annual yield of 3% to 4%; revenues linked to liquid stablecoins, around 7% of reserves, which provide a more stable and regular component. This model explains the high variability of returns observed. In March 2024, the APY for sUSDe peaked at close to 117%, driven by exceptionally high funding rates. Since then, it has normalised and now stands at around 8.4%, a level more in line with market cycles and the gradual diversification of revenue sources.
Proposed returns on sUSDe - Source: entropy_advisors/Dune Ethena's cumulative revenues - Source: entropy_advisors/Dune The ENA token and the expected fee switch Beyond its role as a governance token, ENA could soon become a source of return for its holders. Since November 2024, the Ethena community has been debating the activation of the fee switch, a mechanism designed to redistribute part of the protocol's income (until now reserved for sUSDe holders) to ENA stakers, via sENA.
The principle is simple: of the approximately $376 million in fees already generated by the protocol to remunerate sUSDe savings, a fraction would now be redirected to sENA. The idea is to align the interests of USDe users and governance participants more closely, while enhancing the token's attractiveness.
Five conditions had been set before any activation:
Exceeding USDe supply of 6 billion (target achieved) Exceeding USDe cumulative revenue of 250 million (target achieved) Achieve additional integration on a major CEX for USDe (still pending) Maintain a reserve fund in excess of 1% of USDe supply (achieved in the past, but to be regained after the rapid growth in supply) Guarantee a sUSDe yield at least 5% higher than that of the USDS (condition close to being met). At present, three of the five conditions are still being discussed, but the progress of the protocol suggests that the fee switch could be activated in the next few months. Its arrival would mark an important development: for the first time, ENA would become not only a governance tool, but also a return-generating asset, supported by the protocol's revenues.
This prospect comes at a time when Ethena is seeking to consolidate its institutional base and strengthen the value of its token. The fee switch would then be seen as an additional anchoring mechanism, transforming ENA into a hybrid asset, both political and economic.
Questions around the viability of the model While USDe has met with dazzling success thanks to its high returns, this economic model raises several reservations. The protocol's main source of revenue is based on the positive funding rates observed on the derivatives markets, which are themselves dependent on strong demand for long leverage. However, this configuration is not structural: during a market downturn or a prolonged phase of negative funding, revenues could dry up quickly and put pressure on the stablecoin parity.
Another fragility: the limited share of stable revenues. Returns linked to liquid staking and liquid stablecoins represent barely 13% of reserves, which is still insufficient to guarantee a sustainable return in the event of a prolonged fall in funding rates. Moreover, these revenues themselves depend on external infrastructures such as Lido or third-party assets, which exposes the protocol to concentration and counterparty risks.
The fee switch announced, intended to redistribute part of the revenues to ENA holders, raises questions. While it may increase the attractiveness of the token, it mechanically reduces flows to sUSDe users, even though their loyalty is largely based on the promise of returns. This dilemma between remunerating savers and valuing the governance token raises questions about the sustainability of the protocol's economic equilibrium.
Strategic partnerships across the board Ethena has stepped up its alliances to consolidate its place in the ecosystem:
Anchorage Digital to launch USDtb onshore in the United States, under the GENIUS Act, which opens up regulated institutional access to the US market. Securitize and BlackRock to enable atomic trading between USDtb and the tokenised BUIDL fund, ensuring seamless and transparent convertibility. TON Foundation, which has integrated USDe and tsUSDe directly into Telegram wallets, enabling millions of users to send and save stablecoins in their messaging. Re, a tokenised reinsurance platform, which enables USDe to be used as collateral to support insurance portfolios, with returns that can exceed 20%. Transak, which now offers the purchase of USDe via bank card, Apple Pay and Google Pay, expanding the protocol's audience. StablecoinX: the most ambitious step Alongside its development, Ethena has announced the creation of StablecoinX, a structure born of a merger with SPAC TLGY Acquisition Corp. The aim is to raise $360 million and list on Nasdaq.
Of this amount, $260 million is already being used to buy back ENA tokens on the secondary market, at a rate of $5 million a day, to build up long-term cash. StablecoinX will also manage the infrastructure and staking associated with the protocol, with a key role in the rollout of the Converge blockchain.
This project marks an unprecedented attempt to bring the stablecoin economy into traditional financial channels via a listed company. If successful, the operation could serve as a model for other similar initiatives.
Critics accuse the project of being a mechanism to allow still-vested investors to resell their tokens.
A regulatory framework still uncertain While Ethena has won over some institutional investors with the launch of USDtb and its backing from BlackRock's BUIDL fund, its rollout in Europe is already coming up against several regulatory hurdles. In Germany, BaFin required the protocol to introduce a local redemption window for USDe holders, believing that the stability mechanism relied too heavily on offshore arbitrage and did not sufficiently guarantee the protection of domestic investors.
This measure is forcing Ethena to adapt its operational infrastructure and illustrates the diversity of national approaches, despite the entry into force of the MiCA regulation.
Because in practice, the USDe does not easily fit into the categories defined by MiCA. Designed as a synthetic stablecoin, it is neither fully asset-referenced token (ART), due to the lack of direct fiat collateral, nor e-money token (EMT), since there is no legal claim on a regulated issuer. This ambiguity makes it difficult to register as a compliant stablecoin in Europe. Supervisors fear that the USDe could be considered an unauthorised financial product, or a form of ETF in disguise, which would expose it to marketing restrictions.
Even the USDtb, despite being backed by the BUIDL fund and issued via Anchorage Digital Bank, raises questions. European regulators may consider that the presence of a US tokenised fund in the pool does not fully meet MiCA requirements, which require clear segregation of assets and ongoing supervision by an EU-authorised institution. This could delay its integration into European platforms, even as Ethena seeks to appeal to the continent's institutional investors.
The Big Whale's view Ethena has managed in record time to establish itself as a central player in the stablecoin market, with a dual offering that caters for two distinct audiences: a remunerative synthetic dollar for crypto users (USDe) and a BUIDL-backed fiat version for institutions (USDtb). Its use of ClearLoop to secure collateral and its partnerships with leading players such as BlackRock, Anchorage and Telegram show a clear desire to anchor its model between decentralised and traditional finance.
But behind this success lie a number of weaknesses. Ethena's business model remains largely dependent on funding rates, and is therefore exposed to market cycles. Yields, which were spectacular in 2024, have normalised but could be further eroded if demand for leverage contracts. Governance remains concentrated, and the future fee switch could create tensions between investor remuneration and the value of the ENA token. Added to this is a complex regulatory environment: in Europe, MiCA does not provide a clear framework for a synthetic stablecoin, and BaFin has already imposed local restrictions.
The other bet, that of StablecoinX, adds both an ambitious dimension and questions. Listed on the Nasdaq via a merger with an SPAC, this structure aims to integrate a crypto protocol into the heart of traditional financial circuits. This is a first that could give Ethena unprecedented visibility and legitimacy, but it also carries a risk: that of transforming the operation into a simple liquidity mechanism for traditional investors. ENA's massive buyback programme raises questions about its real motivations and its ability to create sustainable value rather than artificial support for the token price.
Ethena illustrates the boldness and speed of execution of on-chain finance, but its solidity remains to be proven. Its ability to weather a down cycle, comply with regulators, balance the interests of its stakeholders and make StablecoinX a credible growth driver will determine whether it can truly establish itself as a sustainable pillar of the stablecoin ecosystem.
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