Ethena

Ethena is the protocol behind USDe, a synthetic dollar that aims to hold a value of $1 without being backed by dollars in a bank. Launched publicly in February 2024 by Ethena Labs, founded by Guy Young, it pairs crypto collateral with short positions in futures markets, and pays a yield to holders who stake USDe. The ENA token governs the system. This page explains how Ethena works, where the yield comes from, what ENA is for and why USDe carries more risk than a classic stablecoin.

What Ethena does

Ethena issues two main dollar tokens. USDe is a synthetic dollar: approved users mint it by depositing assets such as ETH, staked ETH, BTC or stablecoins, and redeem it the same way. USDtb, launched in December 2024, is a more traditional stablecoin backed mainly by BlackRock’s tokenized money market fund BUIDL; since October 2025 it has been issued by Anchorage Digital under the US GENIUS Act framework. Holders who lock USDe receive sUSDe, whose value rises with the protocol’s revenue.

How Ethena works

When ETH backs USDe, Ethena opens an equal short position in ETH perpetual futures. If ETH rises, the collateral gains and the short loses the same amount, and the reverse when it falls: the position is “delta-neutral”, so the backing stays close to $1. Revenue comes from staking rewards on staked collateral and from funding payments, which longs usually pay to shorts. Collateral is not deposited on exchanges: it stays with off-exchange custodians such as Copper and Ceffu, and only the trading position is mirrored on the exchange.

When funding turns negative, shorts pay longs and revenue can fall below zero. A reserve fund exists to absorb those periods. Ethena publishes custodian attestations every month.

The ENA token

ENA has a maximum supply of 15 billion. 750 million ENA (5%) were airdropped on 2 April 2024 to users of the Shard campaign. Core contributors received 30% and the ecosystem 30%, with a one-year cliff and three years of vesting for contributors and investors. ENA is used to vote and can be staked as sENA. In August 2026 the Foundation bought out locked tokens from seed investors and released the remaining investor allocation at once on 5 October 2026. A fee switch, approved by a Snapshot vote closing on 2 September 2026, will send revenue to ENA buybacks only once USDe supply reaches $7.5 billion.

Governance

Most day-to-day decisions sit with committees. The Risk Committee, cut from five to three voting seats in 2026, approves collateral, custodians and limits; ENA holders elect its members every six months on Snapshot. The Ethena Foundation holds the treasury and, under a plan announced in August 2026, would take over the protocol’s intellectual property and economics. In practice, Ethena Labs still runs operations and the off-exchange infrastructure.

History and key dates

• July 2023: $6 million seed round led by Dragonfly.
• February 2024: USDe public launch; $14 million strategic round led by Dragonfly and Maelstrom.
• 2 April 2024: ENA airdrop of 750 million tokens.
• December 2024: USDtb launches.
• 21 February 2025: after the Bybit hack, Ethena cuts its Bybit exposure (about $30 million) to zero within a day.
• April 2025: agreement with BaFin to wind down Ethena GmbH; the MiCA application is dropped.
• 10 October 2025: USDe falls to about $0.65 on Binance during a market crash while holding its peg onchain.
• September 2026: ENA holders approve the fee switch.

Security and risks

Ethena’s contracts were audited by Zellic, Quantstamp, Spearbit, Pashov and a public Code4rena contest, with no critical issues reported. The main risks are not in the code but in the design:

• Funding risk: long periods of negative funding drain revenue and the reserve fund.
• Counterparty and custody risk: the hedge depends on exchanges and custodians staying solvent.
• Depeg risk: USDe can trade below $1 on some venues in a crash, as on 10 October 2025.
• Liquidity risk: only whitelisted users can mint and redeem directly; others rely on secondary markets.
• Regulatory risk: USDe is not authorized under MiCA in the EU, and its German entity was closed in 2025.

Our risk score is 4 out of 5: careful engineering, but a synthetic design exposed to funding, exchange and depeg risks.

How to use Ethena safely

• Use only the official app linked from ethena.fi and ignore airdrop claim links in direct messages.
• Treat sUSDe yield as variable and never as a savings rate guaranteed by anyone.
• Avoid looping USDe with leverage; a short depeg can trigger liquidations.
• Compare it with fiat-backed coins in our stablecoin guide before you size a position.