Introduction

Ethena is a stablecoin protocol launched in 2024. Their first product was using negative ETH funding rates combined with positive ETH staking yields to create a delta-neutral yield strategy. Due to the strategy being delta-neutral, they could tokenize it in form of a stable coin, USDE. Although the name suggests lasting ties with ETH, the design is actually quite flexible and has since moved from ETH as primary asset of the delta neutral strategy to other assets, mainly BTC, to adapt to changing market conditions.

This was only one of several developments that signaled the adaptability and drive of the team. After shipping USDtb (a stablecoin that is fully backed by institutional-grade tokenized U.S. treasury fund products, initially Blackrocks BUIDL), securing various integrations and partnerships and announcing a whole ecosystem based on their upcoming chain Convergence, and managing to keep their TVL of now over $6b despite market conditions, ENA is definitely worth a closer look

Recent and Future Developments

Recent Developments

• Stablecoin Traction: USDe hit $5.25 billion by April 4, 2025, ranking 3rd, while USDtb reached $1.43 billion by March 26, ranking 8th among stablecoins.

• CEX Integration: USDe and USDtb serve as collateral on Bybit and Bitget, with Bybit offering 5% APR on USDtb, driving adoption (Bybit Listing).
• Governance Activation: ENA holders voted in December 2024 to approve USDtb as a USDe backing asset, a key governance move (Proposal).
• Regulatory Setback: BaFin banned USDe issuance in Germany in March 2025, highlighting synthetic stablecoin vulnerabilities (CoinDesk).

Upcoming Developments

• Converge Chain: Set for 2025, this EVM-compatible blockchain uses USDtb as its gas token, aiming to fuse DeFi and TradFi with Securitize’s support (Crypto News).
• Institutional Growth: Partnerships with Zodia Custody and Copper deepen USDtb’s TradFi reach, offering rewards to holders (Zodia Custody).
• Fee Switch Buzz: Speculation suggests a potential fee mechanism for USDe/USDtb, possibly benefiting sENA holders, though unconfirmed (e.g. Bankless).

Long-Term Vision

Ethena envisions a dual stablecoin dominance: USDe as a DeFi yield engine and USDtb as a regulated TradFi staple, while simultaneously Converge aims to cement Ethena as a DeFi-TradFi nexus, rivaling USDT and USDC. This makes it very clear that Ethena wants a piece of the ever-growing stablecoin pie, estimated to be a $400 billion market by late 2025 as forecast by Bitwise.

Catalysts and Narratives

Converge Chain and Ecosystem Growth

• Catalyst: Converge leverages USDE and USDtb as gas, targeting developers and institutions with a stablecoin-focused blockchain. It merges Ethereum’s DeFi flexibility with TradFi stability via BlackRock’s BUIDL.
• Purpose: It aims to streamline cross-sector transactions, competing with layer-2s like Optimism but prioritizing stablecoin utility.
• ENA Impact: sENA will be used to secure the network and get a share of the fees. Additionally, growing demand for USDE and USDtb will further increase (perceived) value of ENA as an asset.

Stablecoin Act and USDtb

• Narrative: USDtb’s Treasury backing (90%+ in BUIDL) fits the U.S. Stablecoin Act’s push for regulated, audited stablecoins, especially as USDT faces pressure and MiCA reshapes Europe.
• Compliance Needs: USDtb already has KYC/AML through BUIDL and monthly attestations via Copper, as well as no direct yield for holders (although it is suspected that they circumvent this, e.g. ByBit is paying users to hold USDtb likely due to a deal with Ethena). Full compliance may require U.S. issuer registration and enhanced reserve transparency if the Act demands it—steps it’s largely prepared for.
• ENA Impact: Regulatory approval could catapult USDtb’s adoption, lifting Ethena’s profile and ENA’s strategic weight.

USDe and USDtb as CEX Collateral

• Catalyst: Collateral use on Bybit and Bitget, with potential for Binance or Coinbase, enhances liquidity and trader appeal. USDe offers yield (5-20% via funding rates); USDtb delivers stability (5% APR on Bybit).
• Market Reach: USDe targets DeFi traders; USDtb suits conservative CEX users and institutions, covering crypto and TradFi needs. So far, however, it seems like Ethena themselves are the biggest user of USDtb.

• Synergy: USDtb bolsters USDe’s stability as backing asset in volatile markets, making both attractive for CEXs.
• ENA Impact: Expanded CEX adoption could increase TVL, increasing ENA’s influence over a broader ecosystem.

What This Means for ENA

ENA’s catalysts—Converge’s ecosystem potential, USDtb’s regulatory alignment, and CEX collateral growth—could drive Ethena’s TVL significantly in the future, enhancing ENA’s value capture. A fee switch could directly boost returns, but even without it, these triggers signal strong potential upside, tempered by dilution and competition.

Furthermore, staking ENA for sENA is heavily incentivized: • Ecosystem Airdrops (e.g. Ethereal, Derive) • Alternatively forsake the airdrops on Pendle for ~30% APY as of the time of writing.

The Catch

While all of this might sound too good to be true, ENA has a major problem, namely dilution and constant selling pressure due to ongoing unlocks.

• Tokenomics: 15 billion total supply; 5.3 billion circulating (~35%). Vesting from April 2, 2024:
  • Investors/Team: 4.5b for Core Contributors (30%) and 3.75b for Investors (25%), 1-year cliff, 3-year vesting. Post-April 2025, a combined total 171.875m ENA monthly ($51.5m at $0.30).
  • Foundation: 6 billion (40%), partly used for airdrops (e.g., 750 million in 2024).

• Dilution and selling pressure: Supply could double by 2027, creating constant and large selling pressure, especially since the people receiving the token had a very low entry (or got them for free in case of Core Contributors) and are still massively in profit at current price levels.
  The handful of Core Contributors receive around $28m monthly, and the second round of investments raised at $300m valuation is up ~15x, with the seed round likely significantly more. Both groups are likely to de-risk at least a portion every month, as it is still a very significant amount even at these comparatively low prices.
• Valuation: Even at -80% off all-time high, ENA is still not “cheap” by any means. Even if it is building an ecosystem including EVM chain, at ~$1.5b MC and a staggering $4.4b FDV, it is almost as expensive (wrt. FDV) as Aave and Arbitrum combined - which also have their own ecosystem, stablecoin and chain with significantly more traction as of today.