Ethena turned off its token subsidies before the buyback engine even started.
A pretty bold bet on
$USDe growth.
So how does
@ethena expect to keep growing without paying users more
$ENA?
I think the answer comes down to two things: yield and distribution.
For context, USDe is currently sitting around $4.9B. And
$ENA incentives tied to USDe supply growth ended in Sep, while the first buyback threshold only kicks in once USDe reaches a $7.5B supply.
1. Yield: Equity-perp basis trade
Ethena is expanding its basis trade beyond crypto into tokenized equities.
The strategy is relatively straightforward:
Long tokenized stock + short the corresponding equity perp = collect funding while hedging most of the directional exposure.
And the opportunity is potentially meaningful.
Ethena's Risk Committee found that approved Binance equity-perp names were averaging around 7% annualized funding, while approved OKX names ranged from 8-16% at the time of the study.
Of course, these aren't guaranteed yields. Funding constantly changes, can turn negative, and the hedge still carries execution, basis and counterparty risks.
But it gives Ethena another market to generate yield beyond BTC/ETH funding.
The equity-perp market already had roughly $2.9B in one-sided open interest across the venues studied.
That's a potentially important expansion of USDe's yield opportunities.
2. Distribution: Ethena Pay
The second bet is that people increasingly hold USDe because it's useful, not because they're being paid token incentives.
USDe is already integrated across 100+ venues and protocols.
Now Ethena Pay is trying to take it beyond crypto-native users and into everyday payments, savings and spending.
The interesting part is that Ethena is moving beyond relying entirely on third-party platforms to distribute USDe.
With Ethena Pay, it's building a direct consumer distribution channel.
Of course, launching a payment product doesn't automatically translate into meaningful USDe adoption.
But if it works, that's another source of demand that doesn't depend on continuously distributing
$ENA.
And this is where the tokenomics become interesting.
The old growth model relied heavily on:
$ENA incentives
↓
USDe growth
↓
More incentives to sustain demand
The new model Ethena is betting on looks more like:
Attractive yield + broader distribution
↓
Organic USDe demand
↓
More USDe supply
↓
Potentially larger revenue base
↓
$7.5B supply threshold
↓
Revenue-funded
$ENA buybacks
The buyback allocation starts at 5% of protocol revenue at $7.5B USDe supply and scales up at higher milestones.
So USDe growth alone isn't enough. The protocol also needs to generate sustainable revenue from that supply.
That's why I think USDe supply, alongside protocol revenue, might be the most important thing for
$ENA holders to watch right now.
Ethena is effectively testing whether it can grow without relying on token emissions as its main incentive.
And with USDe around $4.9B, there's still a meaningful gap before the first buyback threshold.
If supply keeps growing now that the incentives have ended, that's a much stronger signal of genuine demand than growth driven by continuously paying users more
$ENA.
Whether that demand can eventually translate into meaningful value accrual for holders is the next question.
That's the experiment I'm watching.