No.174
Ethena ENA
the delta-neutral dollar
π a tightrope walker holding long crypto in one hand and short futures in the other, standing perfectly still at a dollar while the rope sways
π¬ βI hold no bank dollars. I hold crypto, then I short the same amount in futures so the two cancel out and I sit at a dollar. Calm markets, I barely move. A storm, and you can feel the rope shake under my feet.β
- Ethena issues USDe, a synthetic dollar that aims to stay near $1 with no fiat in a bank.
- The trick: hold crypto, then open an equal-size short futures position so price moves cancel out.
- ENA is the governance token. Fixed cap of 15 billion, unlocking into about 2028.
- Oct 2025: in a crash USDe briefly slipped to ~$0.65 on Binance, the model's scariest day so far.
π The Story
July 2023. Ethena Labs, led by founder Guy Young, raised a $6 million seed round around a blunt question: could you build a dollar for crypto that doesn't lean on a bank? Most stablecoins like USDT and USDC do the safe, boring thing, a company holds real dollars and prints one coin per dollar. Ethena wanted a dollar that lived entirely on-chain.
Its answer was USDe, a synthetic dollar. Instead of cash in a vault, USDe is backed by crypto like ETH and staked ETH, paired with an equal-size short bet in futures. When the crypto goes up, the short loses the same amount, and vice versa. The two halves cancel, so the value parks near a dollar. Holders who stake USDe earn yield from staking rewards plus the funding paid on those shorts. Ethena nicknamed it the βInternet Bond.β
April 2024. The ENA governance token launched, partly through a Binance Launchpool that handed out 2% of supply, and through airdrop βSeasonsβ that rewarded early users. By December 2024 USDe had grown past DAI to become roughly the third-largest stablecoin, and ENA touched an early high around $1.31. A dollar backed by a balanced trade instead of a bank account had arrived, and people were using it.
October 10β11, 2025. Then came the storm. A roughly $19 billion crash swept the market, and for a few hours USDe broke its peg, falling to about $0.65 on Binance. It held near $0.99 on decentralized exchanges and redemptions still cleared at $1, so the protocol itself didn't collapse. But ENA fell about 60%, USDe's supply shrank around 31%, and Binance later reimbursed roughly $283 million to users caught in the gap. The rope had shaken hard, and everyone saw it.
Ethena spent the months after steadying its footing: in December 2025 it added Anchorage Digital Bank, a US-chartered custodian, with monthly attestations, and by 2026 was pushing an institutional version, iUSDe, with Coinbase Ventures buying in. A tightrope act, still walking, more carefully now.
π Stats
𧩠How it works
The whole idea is a balancing act traders call delta-neutral. Ethena holds crypto collateral, then opens a short futures position the same size. If ETH drops 10%, the collateral loses value but the short gains roughly the same amount, so the combined value barely budges, that's how USDe holds a dollar. The yield comes from staking the collateral plus the funding rate paid on the short (the βbasis tradeβ). It runs on Ethereum smart contracts and price oracles, not its own blockchain.
π Light & Shadow
- A dollar that pays yield and doesn't need a bank account, the funding and staking rewards flow to people who stake USDe
- It scaled fast, passing DAI to become roughly the third-largest stablecoin by late 2024
- It is learning to answer critics: a US-chartered custodian (Anchorage) and monthly attestations were added in 2025β2026
- The peg is held by a live trade, not cash in a vault. In the Oct 2025 crash USDe slid to ~$0.65 on Binance before recovering
- The yield can flip: if futures funding turns negative, the short costs money instead of earning it
- Critics liken its tail risk to algorithmic stablecoins like Terra/UST, and it leans on centralized exchanges to hold the shorts
𧬠Evolution lineage
Ethena is not a fork of any coin and shares no founder with another chain. It sits in the stablecoin family as a different answer than fiat-backed USDT/USDC/DAI, holding a balanced trade instead of bank dollars. The model it is most often compared to is the algorithmic stablecoin Terra/UST, a cautionary cousin rather than a relative. It is an Ethereum-ecosystem DeFi protocol, also deployed on Solana and Base.
π§ Meet other friends
β FAQ
- What is Ethena (ENA)?
- Ethena is a DeFi protocol on Ethereum that issues USDe, a synthetic dollar built to stay near $1 without holding fiat in a bank. ENA is the governance token its community uses to vote on the protocol.
- How does USDe stay at $1 without bank dollars?
- It uses a 'delta-neutral' setup: the protocol holds crypto like ETH and staked ETH, then opens an equal-size short position in perpetual futures. When the crypto's price moves, the short moves the opposite way, so the two roughly cancel and the value stays near $1. Yield comes from staking rewards plus futures funding.
- Has USDe ever lost its peg?
- Yes. During a roughly $19 billion crypto crash on October 10β11, 2025, USDe briefly fell to about $0.65 on Binance, though it held near $0.99 on decentralized exchanges and redemptions still cleared at $1. Binance later reimbursed about $283 million. It shows the model can strain under stress.
- How many ENA are there?
- ENA has a fixed cap of 15 billion tokens. Not all are in circulation yet; they unlock over a multi-year vesting schedule running into around 2028. (Information only, not investment advice.)
β οΈ Not investment advice. All figures are for information only