Ethena (ENA)
Ethena Labs is a decentralized protocol built on the Ethereum blockchain. It aims to provide a crypto-based alternative to traditional banking systems. Founded by Guy Young, it introduces the 'Internet Bond' (USDe), a globally accessible and permissionless savings instrument denominated in dollars.
Overview of Ethena
Ethena is a DeFi startup that offers derivative infrastructure to transform Ethereum into a crypto-native yield-bearing synthetic dollar, independent of traditional banking systems. The protocol's product suite includes a delta-neutral synthetic dollar, USDe with embedded yield, globally accessible floating and fixed-rate USD-denominated bonds, and capital-efficient leverage. Users can deposit USD, Ethereum, or liquid staking tokens as collateral to create USDe. This represents a decentralized, scalable, and stable asset, deriving returns from Ethereum's economic activity and futures markets.
| Ticker | ENA |
| Category | Decentralized Finance (DeFi) |
| Website | https://www.ethena.fi/ |
| @ethena_labs | |
| Telegram | ethena_labs |
| Contract Addresses | |
|---|---|
| ethereum | 0x57...61 Copied! |
Ethena ensures security, transparency, and programmability by distributing collateral to on-chain MPC custodial contracts, eliminating the reliance on centralized servers for custody. USDe generates yield for users through staked Ethereum returns and by capturing the basis in ETH perpetual funding rates.
Funding
In July 2023, Ethena raised $6 million in a seed funding round led by Dragonfly, a crypto-focused venture capital firm, with participation from BitMEX founder Arthur Hayes and his family office, Maelstrom. Major crypto derivatives exchanges such as Deribit, Bybit, OKX, Gemini, and Huobi, along with several venture capital and trading firms, also invested. The funding aimed to support the launch of its stablecoin and bond asset, USDe, complete the testnet phase, establish industry partnerships, and conduct smart contract audits for protocol security and efficiency.
USDe creation mechanics
Process of creating USDe
USDe is generated by depositing LST, ETH, or USD. The internal swap function aligns with the collateral position. Ethena directs the collateral to an off-exchange custody account, providing a ZK proof of position solvency. The off-chain server selects the venue with the most efficient funding rate, executing a 1x short ETH-PERP. Stability is maintained through delta-neutral positioning between spot stETH and the short ETH perpetual. Depositors receive USDe, accumulating yield from staked Ethereum returns and funding payments.
Scalability and stability
Scalability is achieved through derivatives, allowing USDe to scale without significant over-collateralization, requiring only 1:1 collateralization. Stability is ensured through unlevered short perpetual positions that maintain a delta-neutral position, ensuring USDe is only issued with a perfectly hedged initial notional balance.
Censorship resistance
Censorship resistance is achieved by separating collateral from the banking system and storing trustless crypto collateral outside centralized liquidity venues in on-chain, auditable, programmatic custody account solutions.
Ethena Labs and World Liberty Financial partnership
On December 18, 2024, Ethena Labs announced a strategic partnership with World Liberty Financial, backed by Donald Trump, to integrate Ethena’s sUSDe token—a staked version of its USDe synthetic dollar—with World Liberty Financial’s Aave instance. This integration allows users to deposit USDe and receive rewards in both sUSDe and World Liberty’s WLF token. This strategic move is expected to enhance stablecoin liquidity and utilization rates on the protocol.