Standard Chartered ENA Research Report: USDe Supply to Grow 8x by 2028

Introduction: Ethena has created a synthetic dollar backed by "crypto assets + hedging" that doesn't require bank backing yet can continuously pay yield — an extremely rare feat in the stablecoin sector. What's more noteworthy is that Standard Chartered has just begun covering it and predicts its supply could grow 8x by 2028. This article breaks down its mechanism, sources of yield, and what the recent tokenomics overhaul means for investors.

A Synthetic Dollar in the Crypto World

Ethena's USDe is a "synthetic dollar" that maintains its value through crypto assets and hedging rather than holding dollars in a bank, currently offering an annualized yield of about 5%.

Standard Chartered, a major UK bank, has just started publishing research reports on Ethena, predicting that USDe supply could grow 8x to $40 billion by 2028.

The ENA token will receive buybacks backed by Ethena's revenue, triggered once USDe supply exceeds $7.5 billion, and scaling up as supply grows.

USDe has shrunk by two-thirds since the crash last October, but it falls outside the jurisdiction of the GENIUS Act, which prohibits ordinary stablecoins from paying yield — a fact that could help it rebound.

Ethena is a project that has existed in crypto since early 2024, and it created a rather unique synthetic stablecoin, USDe, using a novel mechanism involving hedging. Because it's so unusual, I've wanted to write about it for a long time.

Recently there's been an update to ENA's tokenomics, and a large token unlock occurred this week on October 5. Given all this, I thought today might be a good time to write an article about Ethena, the USDe stablecoin, and the ENA token. If you want to learn more, read on.

Most people in crypto know USDC and USDT, the two largest stablecoins. For every token they issue, they hold the equivalent of $1 in cash or US Treasuries somewhere in the TradFi system.

Ethena's USDe works differently. Instead of putting dollars in a bank, it holds crypto assets plus a hedge position that offsets crypto asset price fluctuations. This is why Ethena calls it a "synthetic dollar," though most people just treat it as another stablecoin.

Ethena launched on Ethereum in February 2024, founded by Guy Young, with early supporters including crypto investment firms like Dragonfly and Galaxy Digital, BitMEX co-founder Arthur Hayes, and traditional asset manager Franklin Templeton.

One of the biggest differences is that, unlike USDC or USDT, USDe actually pays you yield. If you stake USDe, you receive sUSDe, which currently offers an annualized yield of about 4.8%.

Recently, Standard Chartered, a major UK bank, began publishing research on Ethena. Big banks hire analysts to regularly write reports and price predictions on companies and assets their clients might invest in, so Standard Chartered starting to do this for a DeFi project is a big deal for the project!

Standard Chartered predicts USDe supply could grow about 8x, from roughly $5 billion today to $40 billion by the end of 2028. This aligns with the stablecoin growth theme we're seeing, as TradFi and the crypto world grow closer together.

How It Works

Suppose someone deposits $100 worth of ETH to mint $100 worth of USDe. Ethena will immediately open an equivalent-sized position on a crypto exchange betting on ETH declining, using perpetual contracts — if you want to learn more, you can refer to my previous discussion of perpetual contracts in the article below.

Perpetual Contracts and Leverage

If ETH's price halves, ETH is now worth $50, but the position betting on the decline gained $50, so the underlying backing assets are still worth $100. If ETH doubles, the situation reverses, and the total value still remains $100. No matter which way ETH goes, the two sides cancel each other out, and the dollar value stays the same!

Yield comes from two places:

Staking rewards generated by the ETH used as backing.

Funding rates. In the perpetual contract market, when most traders bet on prices rising, they periodically pay a small fee to the other side. Ethena is on the other side, so in a bull market it receives this money.

So this yield is real income generated by trading, and USDe is backed by real on-chain collateral that you can see directly on their website.

Holding USDe is just holding dollars, while staking it into sUSDe lets you get dollars plus a share of the yield from the two sources above. Currently about 60% of USDe is staked and earning yield.

However, yields fluctuate with the market. In 2024, funding rates averaged about 11% annualized, and now they're around 5% — which is why sUSDe's yield has dropped from double digits in its first year. But even today, 5% is still a solid yield.

Staking USDe into sUSDe is very simple. Open the interface at app.ethena.fi, click on the "Savings" tab, and you'll see clear Stake or Unstake options to switch between USDe and sUSDe.

ENA is Ethena's governance token. ENA has a total supply of 15 billion tokens and currently trades at about $0.25.

For a while, ENA faced the same problem as many tokens. Early investors were selling, and newly unlocked tokens each month added more sell pressure. Holders also couldn't see how the protocol's revenue would actually flow to them.

However, a few months ago in August, the Ethena Foundation announced a comprehensive overhaul to address this:

The Foundation bought out all locked tokens held by major seed-round investors who had been selling ENA since the October 2025 peak.

Ownership of the protocol and the value it generates was transferred to the Foundation governed by ENA, rather than to Ethena Labs shareholders.

A "fee switch" that activates once USDe supply exceeds $7.5 billion. From that point on, a portion of Ethena's revenue will be used to buy back ENA, starting at 5% and gradually increasing to 25% once supply exceeds $25 billion.

Monthly investor unlocks will cease. Instead, all remaining investor tokens were released in a single event on October 5, after which only about 12% of the supply remains locked, including team, ecosystem, and foundation tokens.

By the way, if you're not yet familiar with how token buybacks work and the incentives they create, I discussed this in a previous article.

Token Buybacks

Ethena's own estimates show that assuming a 6% yield, at $7.5 billion in supply, annual buybacks would be about $22.5 million; at $15 billion in supply, annual buybacks would rise to $135 million. $15 billion is roughly the peak level USDe reached last year. Ethena says the plan is designed to support supply returning to its peak, and their goal is for USDe supply to exceed $100 billion within five years!

While the USDe stablecoin is Ethena's core business, the company also allows other institutions to use its infrastructure to issue their own stablecoins. Just this week, EtherFi announced the launch of a stablecoin powered by Ethena. EtherFi is a crypto platform with over $300 million in stablecoin deposits and more than 100,000 active crypto bank cards.

Previously, Jupiter, MegaETH, and Sui had already done the same. Once the fee switch is turned on, revenue generated by these additional stablecoins will also be included in buybacks.

This is why Standard Chartered's price target for ENA is so dependent on USDe regaining growth. The bank expects ENA to reach $0.42 by the end of this year, $1.10 in 2027, and $2 by the end of 2028.

The problem is that buybacks haven't started yet. USDe supply is currently around $5 billion, so it needs to grow by about half before the fee switch activates. Ethena also stopped paying ENA incentives to USDe holders starting September 30, so from now on, any supply growth must come from yield itself, not token rewards.

Risks and the Crash

Ethena's biggest risk is embedded in USDe's yield. That yield depends on traders mostly betting on prices rising, and in a prolonged bear market, funding rates can turn negative. When that happens, Ethena needs to pay rather than collect fees, and it maintains a reserve fund for such periods.

Ethena also depends on centralized exchanges, since its hedge positions are held there. If a major exchange collapses or freezes withdrawals, some of Ethena's hedge positions could be trapped.

Moreover, when yields decline, capital tends to leave, supply contracts, and the ENA token narrative weakens accordingly.

The moment that did the most damage to USDe's reputation occurred during the crash on October 10 last year, which I wrote about in the article below.

Chain Liquidations

USDe fell to $0.65 on Binance while trading near $1 on other exchanges. The problem was entirely internal to Binance. It used its own shallow order book to price USDe rather than the much deeper markets elsewhere, and since Binance users could use USDe as collateral, that artificially depressed price triggered a wave of liquidations.

Two other tokens, BNSOL and Binance's own WBETH, also deviated in price on Binance in exactly the same way.

Binance rolled out a fix to its pricing system ahead of schedule and paid $283 million to compensate affected users. Ethena continued to operate as intended, remained overcollateralized throughout, and continued to redeem every USDe at $1.

But none of that stopped the headlines from hitting.

Seeing a synthetic dollar drop to $0.65 was enough to shake confidence, and roughly $3 billion was subsequently redeemed. The market downturn after the crash exacerbated this, as falling funding rates cut yields and leveraged sUSDe positions in DeFi were unwound. USDe supply has fallen from a peak of $14.8 billion to about $5 billion today.

Yet Ethena did what it was supposed to do during its toughest test to date, redeeming billions of dollars at $1 per token on a problem that wasn't even of its own making.

Yield-Bearing Stablecoins

The GENIUS Act is the US stablecoin law passed last year that prohibits regulated stablecoin issuers from paying interest to holders. This forced Circle and Coinbase to restructure USDC's reward mechanism.

Stablecoin yield was also the focal point of the fight banks picked in the recent CLARITY negotiations, because they don't want crypto companies competing for people's deposits — and this is one of the reasons CLARITY failed, as I explained a few weeks ago.

But USDe is not a GENIUS stablecoin, because as mentioned earlier it's a synthetic dollar, so it can legally continue paying yield!

With the rules as they stand, this is a real advantage; and if lawmakers decide to close this gap, it's also a tangible risk.

My judgment is that Ethena has already survived the stress test that critics expected would break it, and a dollar that pays market yield is something regulated stablecoins legally cannot offer.

Dollars that generate yield by default are a hotly debated topic in the TradFi banking world, but they feel like an important component of where on-chain money is headed, and Ethena is one of the clearest examples of that today.

Now that they've improved their tokenomics and a major bank is betting on their renewed growth, I wouldn't bet against them!