The governance token of the decentralized finance protocol Ethena, known as ENA, saw a significant surge on Tuesday, reaching its highest point since late January. The token, which traded at $0.8303, climbed to approximately 87 cents in the early hours of the day, reflecting an 8.3% increase over the previous 24 hours. Over the past week, ENA’s value has risen by more than 20%, according to data from CoinDesk.
This latest uptick can be attributed to a major announcement from Binance, the world’s largest cryptocurrency exchange by trading volume. The exchange revealed plans to begin trading with USDe, Ethena’s yield-generating token valued at $13 billion, starting Wednesday. The successful listing of USDe on leading exchanges is critical for Ethena as it prepares to activate its fee switch mechanism, which aims to distribute protocol revenues directly to ENA token holders. In the previous month, the protocol generated $54 million in revenue, totaling over $480 million since its inception in late 2023, as reported by Token Terminal.
Arthur Hayes, co-founder of BitMEX and a notable investor in Ethena, commented on the significance of these developments. “With the Binance USDE listing, the ENA fee switch is going to get turned on. That unlocks $500 million of buybacks,” he stated, highlighting the expected capital influx resulting from the fee switch activation.
In addition to the Binance listing, Ethena has experienced a surge in its USDe token’s market cap, skyrocketing from approximately $5.5 billion in mid-July to nearly $13 billion now, driven by a growing appetite among crypto investors for yield-generating assets. USDe, marketed as a “synthetic dollar,” utilizes bitcoin, ether, and Solana as backing assets, paired with an equivalent value of short perpetual futures. This strategy enables the generation of revenue from backing derivative assets when perpetual funding rates are favorable, allowing the protocol to offer a 6.5% annualized yield to stakers, surpassing traditional money market funds and the lending rates of USDC and USDT on platforms like Aave.
Furthermore, Ethena is actively participating in a broader trend within the digital asset space, recently capturing attention from stock markets as StablecoinX and TLGY, two firms poised to merge and list on Nasdaq, raised $530 million with plans to accumulate ENA tokens. Ethena is also venturing into the burgeoning stablecoin issuance market by launching a native stablecoin for the Ethereum scaling network MegaETH and hinting at possible involvement in the stablecoin initiatives of popular derivatives exchange Hyperliquid.
The confluence of these developments positions Ethena as a formidable player in the decentralized finance landscape, with the potential for increased token value and heightened interest from investors.
