Ethena is a decentralized finance protocol that issues USDe, a synthetic stablecoin pegged 1:1 to the U.S. dollar. Unlike traditional stablecoins backed by fiat reserves, USDe uses a delta-neutral strategy to maintain its peg. The protocol holds long positions in cryptocurrencies like ETH or liquid staking tokens, while simultaneously taking short positions in perpetual futures markets. This approach allows it to earn yield from the funding rate spread while remaining market neutral. Over time, Ethena has expanded its backing to include assets like BTC and stablecoins, enhancing liquidity and risk resilience.

Since its launch, USDe has grown rapidly and established itself as one of the largest stablecoins by market capitalization. At its peak, it became the third-largest issuer globally. Initially, users were drawn to the exceptionally high yields available through the protocol, which were driven by favorable funding rates in futures markets. As competition increased and funding rates normalized, returns decreased significantly but remained attractive due to additional yield from staking rewards and the basis trade. Ethena has also established a substantial reserve fund to protect against volatility and ensure redemptions, reinforcing the stability of USDe.

Governance of the Ethena protocol is led by holders of the ENA token. These token holders vote on decisions such as risk management policies, asset allocations, and updates to protocol parameters. Staking ENA gives users access to additional rewards and a say in the direction of the protocol. Ethena has introduced sENA, a staking receipt token that enhances composability within DeFi ecosystems. Through this mix of innovative financial engineering, decentralized control, and capital efficiency, Ethena aims to provide a stable, yield-bearing asset that is resistant to censorship and fully on-chain.