The native token of the Ethena protocol ($ENA), best known for its yield-bearing "synthetic dollar" $USDe, rose on Thursday after the foundation behind the project announced a major overhaul of the token's economics.
The changes aim to address two issues plaguing $ENA: selling pressure from early investors and uncertainty over how much of Ethena's economic value accrues to the token.
The plan cancels the monthly VC unlock schedule, proposes using protocol revenue to buy back $ENA, and draws a clearer line between token holders and shareholders of Ethena Labs.
$ENA, already one of the fastest-rising cryptocurrencies this week, gained 23% in the last 24 hours to $0.17. The token's price has doubled in just over a week as a broader crypto rally has heated up.
Reducing Supply, Creating Demand
The Ethena Foundation said it purchased remaining locked tokens from some large early investors who had sold $ENA over the past 9 months. It will also accelerate the unlock for remaining initial investors, ending the monthly VC token release. Team tokens remain subject to existing vesting schedules.
Concurrently, $ENA holders are voting on a "fee switch" that would create a permanent source of demand for the token. Buybacks would increase as the circulation of $USDe hits certain benchmarks. Once the first threshold ($7.5 billion) is reached, 95% of net revenue from Ethena-branded businesses will be directed to programmatic purchases of $ENA, with the remaining 5% funding growth.
"Ethena Labs and the foundation are also officially defining where the protocol's economics lie," the announcement said. "Under a binding agreement, substantially all material intellectual property and economic benefits from the Ethena Protocol will belong to the foundation and ecosystem, not the shareholders of Ethena Labs. The agreement is expected to be published as early as October."
Reviving USDe Growth
The overhaul comes after a sharp reversal for $USDe, whose supply has fallen below $5 billion from a peak of around $15 billion in October during the crypto bull market. $USDe generates yield partly from derivatives funding rates, which have decreased as crypto markets have cooled.
Ethena $USDe. Source: DefiLlama.
Since then, Ethena has sought other avenues for growth and yield farming. Last week, the project announced a $1 billion credit line with FalconX, which could funnel USDe backing into overcollateralized institutional loans.
It has also signed deals with major institutions: Janus Henderson invested in $ENA in June and is exploring distributing $USDe, while Coinbase finally launched a savings product alongside the Ethena platform, as its venture arm purchased $ENA.
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