Ethena’s synthetic stablecoin, USDe, has surpassed rivals like DAI to become the third-largest stablecoin by market capitalization, behind only USDT and USDC. Its circulating supply has surged to over $12.4 billion, a 42% increase in just over a month.
Approaching the ‘Fee Switch’
This rapid growth brings Ethena closer to activating its long-awaited “fee switch,” which would allow ENA token holders to receive a share of the protocol’s revenue for the first time. The fee switch proposal, approved in November 2024, has three key milestones:
- Surpassing a $6 billion USDe supply.
- Achieving $250 million in cumulative protocol revenue.
- Securing listings for USDe on four of the top five derivatives exchanges.
Ethena has already accomplished the first two milestones. The only remaining hurdle is the exchange listings, which the founder, Guy Young, has stated is a top priority.
A Different Kind of Stablecoin
Unlike traditional stablecoins backed by cash or bank reserves, USDe maintains its peg using a “delta-neutral” strategy. It hedges user deposits with short positions on centralized exchanges to protect against price volatility.
While this approach has attracted users seeking new yield opportunities, it has also drawn scrutiny. S&P Global has flagged it as a higher-risk asset due to its reliance on derivatives, and other analysts have warned about potential liquidity issues. The growth of USDe has been largely fueled by DeFi yield strategies on protocols like Aave and Pendle, which allow users to compound their earnings through recursive lending.
September 2025, Cryptoniteuae
