USDe is this cycle’s attempt at a decentralized stablecoin alternative.

Internet Bond?
Structured derivatives product?
Synthetic dollar?

USDe has exploded to a market cap of over $2 billion while bootstrapping reserves due to ENA token incentives from Ethena Labs 🧵

After raising $21.5 million in two rounds led by Dragonfly, USDe was publicly launched on February 19th.

Since then, USDe's market cap has grown from ~$300,000 to over $2 billion. 

This makes USDe the #5 (synthetic) US dollar token by market cap, behind FDUSD and DAI.

Research /messari • Crypto explainooor 🧵 • Chicagoan nomading Latam 🌎

What catalyzed this parabolic growth? Points, of course. 

Well, Shards. Ethena's Shard Campaign lasted 1.5 months and culminated in an ENA airdrop.

Incentives continue today with a new Sats Campaign that will end in 5 months (Sept. 2nd) or when USDe's supply exceeds 5 billion.

Users earn Sats like they did Shards. 

By holding USDe, locking USDe, staking USDe, providing USDe liquidity on protocols like Curve, or through campaigns with protocols like Pendle, Gearbox, Morpho, and Mantle.

As of today, ENA can be locked for Sats as well.

While Ethena hasn't disclosed how much ENA will be airdropped when this campaign ends, users are hungry for points regardless.

Staking USDe to receive sUSDe yields 37.1% APY, but earns less Sats than USDe. 

So, only ~19.1% of USDe is being staked today!

What happens with the yield earned from the ~1.74 billion USDe that isn't staked? 

It goes to Ethena's Reserve Fund, bootstrapping it immensely during this incentive period. 

Why does Ethena need reserve funds? Because USDe isn't backed 1:1 with US dollars.

USDe is collateralized by:

1. ETH (39%)
2. BTC (26%)
3. Liquid staked ETH tokens like stETH (18%)
4. USDT (16%)

USDe synthetically maintains stable collateral value by utilizing derivative positions on both CEXs and DEXs to hedge against its non-stablecoin collateral.

USDe can be staked to receive an equivalent value of sUSDe. 

sUSDe tokenholders earn yield from USDe’s (1) staked ETH collateral and (2) the funding rate of short ETH/BTC positions.

As mentioned, ~80.9% of users are foregoing the 37.1% APY to earn Sats and a future airdrop.

There has been heavy debate over the risks presented by USDe. 

Most notably, the risk of an extended negative funding rate environment which could cause USDe's collateral to drop in value below the supply of USDe, resulting in a de-peg under $1.

But there hasn't been much discourse over the future governance of Ethena using $ENA (which isn't currently live). 

ENA is planned to be used to vote on governance proposals related to:

Details about Ethena’s upcoming governance process or any intended implementation date haven't been publicly detailed.

Still, ENA tokenholders will have skin in the game + the ability to manage various USDe parameters and integrations that directly impact risk.

Regardless, users should be aware of the superuser functions present in the sUSDe and USDe Mint and Redeem contracts.

Ethena Labs controls a 4-of-8 multi-sig that can:

• Blacklist sUSDe tokenholders
• Burn and re-mint blacklisted users' sUSDe
• Extend sUSDe's unstaking period to a max of 90 days
• Pause USDe minting and redemption indefinitely
• Add or remove supported collateral assets or custodian addresses

Today, 3.75 billion ENA tokens (25% of the initial token supply of 15 billion) remain for “Ecosystem Development and Airdrops,” including for the Sats Campaign.

Notably, Ethena can mint up 10% of ENA's supply once per year. So, 1.5 billion ENA can be minted on April 1st, 2025.

Internet Bond?
Structured derivatives product?
Synthetic dollar?

Ethena has undeniably created a token that has boomed in adoption through point incentives. 

Messari Diligence Reports on ENA and USDe are live!

Internet Bond?
Structured derivatives product?
Synthetic dollar?

Ethena has undeniably created a token that has boomed in adoption through point incentives. 

Messari Diligence Reports on ENA and USDe are live!

https://messari.io/project/ethena/diligence-report
https://messari.io/project/ethena-usde/diligence-report