- Ethena's USDe soars past $12 billion in circulation.
- The protocol could soon active its fee switch.
A version of this article appeared in our The Decentralised newsletter on September 2. Sign up here.
Ethena, the issuer behind the USDe dollar-pegged token, is surging.
The supply of USDe has grown a whopping 42% over the past month to an all-time high of $12.43 billion, and the protocol’s revenues are the highest they’ve been since the start of the year, topping $61 million in August.
USDe is now firmly the third-biggest dollar-pegged token behind Tether’s USDT and Circle’s USDC, having overtaken the supply of Sky’s DAI and USDS stablecoins combined. Ethena is also the fifth-biggest DeFi protocol by deposits.
Now, all eyes are on Ethena’s planned fee switch. For the first time, holders of Ethena’s ENA governance token could soon receive a slice of the protocol’s profits.
Fee switches are big news for a protocol’s token holders. Last week, Uniswap DAO, the biggest decentralised exchange, voted to set up a new legal entity as part of its fee switch plans.
Ethena Labs, the company behind Ethena, hashed out three milestones that the protocol needed to hit before it flicks the fee switch:
- USDe’s circulating supply needs to surpass $6 billion.
- The protocol’s cumulative revenue needs to hit $250 million.
- The USDe token must be integrated on four of top five centralised exchanges by derivative volumes.
The first two metrics have been hit. That just leaves the centralised exchange integrations.
Ethena founder Guy Young told DL News that working towards those integrations remains a “top priority.”
Ethena’s success comes as the market for dollar-pegged crypto tokens hits an all-time high of $284 billion on the back of landmark stablecoin legislation in the US.
Unlike popular stablecoins such as USDT and USDC, Ethena’s USDe token isn’t backed one-to-one by dollars.
It instead hedges deposits used to mint USDe with bearish bets on centralised crypto exchanges, which it says creates a stable backing that is unaffected by price swings.
So far, USDe hasn’t meaningfully deviated from its targeted dollar peg.
But critics see more risks compared to conventional stablecoins.
Chaos Labs, a DeFi risk adviser, has warned Ethena’s rehypothecating the backing assets of USDe could cause a liquidity crunch on top DeFi lender Aave.
S&P Global Ratings also assigned Ethena’s USDe a 1,250% risk weighting in its evaluation of DeFi lender Sky.
Ethena Labs declined to comment on the issues raised by Chaos Labs and S&P Global. Young previously told DL News his firm and its partners have taken ample precautions to ensure USDe stability.
For many DeFi users who don’t mind the potential risks, USDe is a better option than other stablecoins.
It can be locked up to earn an average yield that’s usually higher than the best rates available for major stablecoins.
Currently, Ethena pays out 9% on staked USDe, compared to 4.2% USDC holders can earn on Aave.
Top DeFi stories of the week
This week in DeFi governance
VOTE: Lido DAO votes to migrate Nethermind’s active validators to infrastructure operated by Twinstake
VOTE: Uniswap DAO votes to launch Uniswap v3 on Ronin with co-incentives
VOTE: Rootstock DAO votes to provide more support for Beexo Wallet
Post of the week
Onchain sleuth ZachXBT leaks what he says is a list of crypto influencer wallet addresses, and how much they charge to promote projects.
NEW LEAK: Price sheet of 200+ crypto influencers and their wallet addresses from a project they were recently contacted by to promote.
— ZachXBT (@zachxbt) September 1, 2025
From 160+ accounts who accepted the deal I only saw <5 accounts actually disclose the promotional posts as an advertisement. pic.twitter.com/Kph9dUvDxB
Tim Craig is DL News’ Edinburgh-based DeFi Correspondent. Reach out with tips at tim@dlnews.com.
