Ethena has earned $1.04 billion, but ENA's "buyback switch" is still 58% away: Three major catalysts are approaching

Original author: 0xWizard

Original compilation: TechFlow

TechFlow introduction: Ethena has generated a cumulative $1.04 billion in revenue since launch, of which the past 12 months (under less-than-ideal market conditions) contributed $284 million. But ENA holders have yet to receive a single cent. On September 2, a governance vote passed the "fee switch": once the 14-day average of USDe supply breaks above $7.5 billion, 95% of the revenue routed through that switch will be used to buy ENA on the open market. USDe currently stands at $4.75 billion, still 58% below the threshold. The author believes it will cross the threshold within the next 3 to 6 months, driven by three major catalysts: equity perpetuals, crypto funding rates turning positive, and distribution channel expansion.

Ethena has generated $1.04 billion in revenue since launch, of which the past 12 months (under less-than-ideal market conditions) contributed $284 million. But so far, ENA holders have received 0 from it.

But on September 2, holders finally gained a path to that revenue. A governance vote passed the fee switch: once the 14-day average of USDe supply breaks above $7.5 billion, 95% of the revenue routed through that switch will be used to buy ENA on the open market.

USDe currently stands at $4.75 billion, still 58% below the threshold. We believe it will cross the threshold within the next 3 to 6 months, driven by three major catalysts:

• Equity perpetuals: a yield source earning 15% to 20% funding rates, independent of crypto market conditions
• Crypto perpetuals: funding rates have recovered from negative territory and are moving toward +8%
• Improved distribution: Ethena Pay, TRON deployment, and CEX collateral integrations are all bringing USDe to potential new holders

At its current valuation of $1.43 billion, ENA is priced at roughly 5 times the fees the protocol collected in its worst year. Once the fee switch is triggered, things change: the "fee engine" Ethena has been building for two years begins paying revenue directly to ENA holders.

Three Major Catalysts

1. Equity Perpetuals

As of late August, open interest in equity perpetuals on major trading platforms reached approximately $6.2 billion, roughly 10 times the level in March. In recent months, funding rates on these positions have been around 14% annualized on Hyperliquid and about 17.5% on Binance, versus only 4% to 7% on ETH and BTC. Crucially, equity funding rates are uncorrelated with crypto funding rates: this is a source of yield that pays out regardless of whether the crypto market is in a bull or bear phase.

On August 28, Ethena announced it would extend USDe backing to equity perpetual basis trades, with initial deployments on partner exchanges expected within the coming weeks. Ethena expects RWA perpetuals to surpass crypto allocations (currently 13% of backing) within 12 to 24 months.

If RWA perpetuals surpass the crypto book at 15% to 20% funding rates, that would bring a 2% to 3% blended yield boost. If that segment eventually expands to half of the backing, the equity leg alone could contribute 8% to 10% in sustainable yield.

More importantly, the potential behind equity perpetuals is far greater than crypto perpetuals. In July 2026, global equity market capitalization reached $166.5 trillion, versus about $2.2 trillion for crypto. According to Ethena's own projections, open interest in equity perpetuals could grow to $4 trillion, roughly 40 times the $110 billion peak crypto perpetual book. It's the same basis trade, just several orders of magnitude larger. Of course, a $4 trillion market won't pay 15% to 20% forever (funding rates get compressed as more capital enters), but depth is the key. A larger and uncorrelated yield engine is what will pull USDe supply toward the $7.5 billion threshold and the fee switch that follows.

2. Crypto Funding Rates Have Recovered

From February to April 2026, crypto funding rates on Binance were in negative territory, with ETH averaging -4.0% in February, the weakest month since 2023. During this period, Ethena reallocated its backing from basis trades into various DeFi lending, stablecoin liquidity, institutional lending, and RWA (until recently, only 1% of USDe backing was in basis trades). Although these allocations yielded less than 2024 crypto basis trades, they provided sUSDe holders with a stable 4% to 5% yield when funding rates weren't paying.

Fast forward to now, BTC is at $80,000, funding rates have turned positive again, with ETH funding rates averaging +5.7% in August and BTC averaging +7.3%. As the market continues to recover, Ethena should shift more of its book back toward crypto basis trades, repeating the playbook that took USDe supply to $15 billion in 2024 to 2025.

It's worth noting: Ethena's crypto basis trade has now proven to have Lindy effect, having survived historic liquidation events like 10/10 and other broadly poor market conditions, while smaller competitors collapsed.

3. Distribution: TRON Launch, CEX Collateral

Yield alone won't make USDe grow. People need a place to buy it and a reason to hold it.

Traders can now use USDe as margin on Bybit and Binance, and hold it on Bybit, OKX, Bitget, and Binance. Coinbase and Robinhood already accept it in their products (Coinbase Vault, Robinhood Earn). USDe also launched on TRON on September 11, the chain with the largest stablecoin transaction volume. Note that on-chain expansion matters when a chain truly matters and the growth strategy is well executed (see USDe hitting $300 million shortly after its Robinhood listing).

On September 1, Ethena launched Ethena Pay (@EthenaPay), led by @gdog97_ and @litocoen. Holding USDe balances earns up to 6% yield, and all spending earns 5% AVAX cashback, making Pay the perfect hook to attract retail users to hold USDe. Between September 1 and 9, on-chain card spending reached $632,000, with daily spending rising from $16,000 to $61,600. It's still a beta version (launched with only a few hundred non-US/EU users), but this is the first time ordinary users can hold USDe, earn yield on it, and spend with a card.

Given the success of EtherFi and Plasma's crypto card products, and Ethena Pay's generous rewards (powered by @avax), this could become one of the star products driving USDe toward the $7.5 billion mark.

The Fee Switch

Once the above catalysts push USDe supply above $7.5 billion, the fee switch turns on. A portion of Ethena's revenue will begin buying ENA on the open market. The split is: 5% of revenue at $7.5 billion, 10% at $10 billion, 15% at $15 billion, 20% at $20 billion. Nearly all of that share (95%) goes to buybacks.

The buyback scale amplifies with the profitability of the USDe reserve book. Protocol yield is the interest rate Ethena earns on the assets behind USDe, so the formula is:

USDe supply × protocol yield × fee switch share × 95%

At a 6% protocol yield, the buyback scale at each tier is as follows:

The first tier is small, but the $10 billion and $15 billion tiers (USDe reached $15 billion at one point in 2025) are the key ones. At 4% and 9% of the current market cap annually, both go toward buying the token.

Reference link: Ethena Foundation announcement

Risks and Things to Watch

• October 5 unlock: All VC token unlocks have been compressed to October 5. Estimated at 14% of circulating supply, about $200 million at current prices, 17 months ahead of the original vesting schedule. The Ethena Foundation announced it has bought up the locked tokens of large seed-round investors who sold ENA after October 10, 2025. This alleviates the supply pressure from a large unlock, but investors should still remain vigilant.
• Funding rates turning negative: If the broader market stalls and crypto perpetual funding rates turn negative again, the USDe reserve will once again shift toward non-basis, low-yield (4% to 5%) destinations. This would dampen demand for holding USDe, especially among sUSDe and PT loopers.
• Equity perpetuals remain small: If equity perpetual deployment is delayed, open interest shrinks, or equity perpetual funding rates fall to crypto levels, then this new non-crypto-correlated yield source will be much less effective. Blended sUSDe yields staying in the mid-single digits becomes a weaker reason to mint USDe to $7.5 billion.
• Lending or credit blowup: A large portion of the reserve sits in DeFi lending (such as Aave, Morpho) and institutional credit (such as Maple, FalconX). An exploit or borrower default could erode backing and pause minting.
• Supply never breaks $7.5 billion: If USDe supply stays below the threshold throughout 2027, then the fee switch never turns on, and ENA is just a governance token.

Conclusion

Once USDe supply stabilizes above $7.5 billion, the fee switch will turn on. There are three new catalysts that can push it there: equity perpetuals, crypto funding rates turning positive, and new distribution channels for buying and holding USDe (TRON, CEX collateral, Ethena Pay).

When @0xENAS published "Ethena: A Trillion-Dollar Crypto Opportunity" in October 2024 (sadly now deleted), that opportunity was the stablecoin market plus the crypto basis trade paying USDe yield. Today that market is larger, and distribution is better.

Everything in this article is a bet: a bet that the catalysts we've described can bring USDe supply back to $7.5 billion and keep climbing. If you don't believe that, don't hold ENA. If you do, you know what to do.