Ethena Treasury Strategy: The Rise of Stablecoin Third Empire

Capital stimulation is a pacemaker, real adoption is erythropoietin.

Written by: Zuo Ye

In August 2023, the MakerDAO ecosystem lending protocol Spark offered an annual yield of 8% on $DAI. Subsequently, Sun entered in batches, accumulating an investment of 230,000 $stETH, which accounted for more than 15% of Spark’s deposit volume, forcing MakerDAO to urgently propose a reduction of the interest rate to 5%.

The original intention of MakerDAO was to “subsidize” the usage of $DAI, almost turning into Sun Yuchen’s Solo Yield.

In July 2025, Ethena will leverage the “currency - stock - bond” treasury strategy, with the APY of $sUSDe quickly soaring to around 12%, and $ENA experiencing a daily surge of 20%.

As a treasury strategy emerging from the BTC ecosystem, it flew past the highlights of $SBET/$BMNR and ultimately landed on USDe.

Ethena once again leverages the capital market, successfully creating a two-way flywheel for $ENA and $USDe in the on-chain market and stock market.

Dual Currency System Battle Royale

USDT created stablecoins, USDC occupies users’ compliance mindset, and USDe is a capital catcher.

Image description: The capital journey of Ethena, image source: @zuoyeweb3

When the $ENA treasury strategy was launched, I instinctively thought it was a simple imitation of the current Strategy trend. However, after careful review, Ethena is actually trying to break the curse of the “dual currency” system.

A spell is the issuer of on-chain stablecoins, which must choose between the price of the protocol token and the market share of the stablecoin.

• Aave chooses to empower $AAVE with a price increase of 83.4% over three months, but the issuance of $GHO is only 300 million dollars.
• Sky, evolved from MakerDAO, saw its price increase by 43.2% over three months, with a $USDS issuance of 7.5 billion dollars.
• Ethena token ENA increased by 94.2% in price over three months, $USDe issuance of 7.6 billion USD.

In addition to the collapse of the Luna-UST dual token system, it becomes extremely difficult to maintain the balance between the two, primarily because the protocol’s revenue is limited. If it flows to market share, the token price becomes unstable, and vice versa.

In the entire stablecoin market, this is the barrier to entry set by USDT. USDT invented the stablecoin track, so it naturally doesn’t need to worry. Circle, on the other hand, needs to share profits with partners, but still will not share with USDC holders.

Ethena uses a bribery mechanism to share ENA as a profit “option” with CEX partners, temporarily appeasing large holders, investors, and CEX, and prioritizing the protection of dividend rights for USDe holders.

According to A1 Research’s calculations, Ethena has shared approximately $400 million in profits with USDe holders in the form of sUSDe since its establishment, breaking through the entry barriers set by USDT/USDC.

Ethena not only surpassed Sky in market share of stablecoins (excluding the residual share of DAI), but also outperformed Aave in the performance of its main token project, which is not a coincidence.

The increase in the price of ENA of Ethena is certainly stimulated by factors from Upbit, but Ethena is deeply restructuring the value transmission method of its dual currency system by introducing stock market treasury strategies.

Returning to the previous question, in addition to prioritizing the protection of USDe’s market share, the dividend rights of ENA still need to be fulfilled. Ethena’s choice is to launch StablecoinX by imitating the treasury strategy, but with modifications.

• BTC treasury strategy, taking Strategy as an example, bets on the upward trend of BTC’s long-term price. A holding of 600,000 BTC acts as a catalyst for the rise and will also be a hell during the decline;
• ETH treasury strategy, taking Bitmine (BMNR) as an example, bets on being able to eventually purchase 5% of the circulating share, becoming a new player, following the path of Sun Zhengyi and Li Hua in the stock market, profiting from the trend of volatility.
• BNB/SOL/HYPE treasury strategy refers to the project foundation or a single entity driving up the stock price to stimulate the growth of the native currency. This is the most trend-following group, as these assets have not yet achieved market values similar to BTC/ETH.

ENA’s treasury StablecoinX is different from the above, as it appears to be the actual investment and fundraising on the ENA chain, spending 260 million USD to purchase 8% of the ENA circulating supply, stimulating the ENA price increase through a left-hand to right-hand transfer.

The market reacted positively, with Ethena TVL, USDe supply, and sUSDe APY all rising accordingly. However, note that sUSDe is essentially a liability of the protocol, while the sales revenue from ENA is the profit.

StablecoinX reduces the circulation of ENA, stimulating sales growth in the secondary market, with controllable communication costs, which can be negotiated between Ethena and the investors Pantera, Dragonfly, and Wintermute.

Among them, Dragonfly is the lead investor in Ethena’s seed round, and Wintermute is also a participant. Compared to new funding, this is more like accounting.

Ethena follows the path of capital manipulation and has successfully escaped in the dual-currency system, which should be the biggest stablecoin innovation after Luna-UST.

The real adoption has not yet occurred

When the false prosperity is destroyed, the things that are deeply rooted will be exposed.

The new upward trend of ENA is one of the sources of project profits, and the holdings of USDe/sUSDe will also increase accordingly. At the very least, there is now a possibility for USDe to become a truly application-oriented stablecoin.

The ENA treasury strategy mimics BNB/SOL/HYPE, raising yields to stimulate stablecoin adoption, allowing for profit from volatility trends, while a high control mechanism under negotiation also alleviates selling pressure during downturns.

Capital operation can only stimulate the price of the currency. After stabilizing the growth wheel of USDe and ENA, long-term development still requires the real application of USDe to cover market-making costs.

Image description: Ethena ecosystem expansion, image source: @Jonasoeth

At this point, Ethena has always walked on two legs: off-chain and on-chain.

• On-chain: Ethena collaborates with Pendle for a long-term partnership to activate the on-chain interest rate market, and gradually works with Hyperliquid, while also supporting Ethreal internally as an alternative Perp DEX.
• Off-chain: Collaborating with BlackRock partner Securitize to issue the Converge EVM chain, targeting institutional adoption, with an increased issuance of the compliant stablecoin USDtb following the latest Genius Act and Anchorage Digital.

In addition, Anchorage Digital and Galaxy Digital are both recently popular institutions; in a sense, they are the third wave of market makers after Jump Trading/Alameda Research, with the second wave being market makers like DWF/Wintermute, which will be detailed later.

Ethena’s real-world adoption outside the on-chain and off-chain capital markets is still lacking.

Compared to USDT and USDC, USDe/USDtb only scratches the surface in terms of cross-border payments, tokenized funds, and pricing on DEX/CEX, with the only commendable aspect being its cooperation with TON. It is difficult for DeFi protocols to reach every household.

If Ethena’s goal is on-chain DeFi, then it has already been very successful. However, if it enters the off-chain institutional adoption and retail usage, it can only be said that the Long March has just completed its first step.

In addition, there are concerns about ENA, and the Fee Switch is on the way. Do you remember that Ethena currently only shares profits with USDe holders? The fee agreement switch requires ENA holders to share profits through sENA.

Ethena stabilizes the CEX exchange for USDe through ENA, creating a survival space, and uses financial strategies to stabilize the interests of ENA major holders and investors. However, what is destined to come cannot be avoided; once ENA starts sharing protocol revenues, ENA will also become a debt of Ethena rather than an income.

Only by truly becoming a USDT/USDC-like asset can ENA enter a real self-sustaining cycle; for now, it is still in a state of struggle, and the pressure will never truly disappear.

Conclusion

Ethena’s capital operation inspires more stablecoin and YBS (yield-bearing stablecoin) projects. Even Genius Act compliant payment stablecoins have not stated that RWA cannot be used for interest calculation on-chain.

Following Ethena, Resolv has also announced the activation of the fee switch protocol, but will not actually distribute profits to token holders for the time being. After all, the premise of profit distribution from protocol revenue is to have protocol revenue.

Uniswap has been cautious about the fee switch for many years, with the core aim of maximizing protocol revenue between LPs and UNI holders. Currently, most YBS/stablecoin projects still lack the ability to generate sustainable revenue.

Capital stimulation is a pacemaker, and real adoption is erythropoietin.