In April of this year, we outlined our thinking around Ethena. Since then, a lot has changed:
- Ethena added an additional $750M in USDe supply, officially making it the fourth largest “stablecoin” at $3.1B
- The protocol has now generated over $100M in cumulative revenue, $42M of which has been retained as protocol earnings
- Ethena is now the second largest revenue producing DeFi app in crypto, second to only MakerDAO
- As of yesterday, USDe is officially live on Solana
However, despite Ethena’s nominal success on paper, the token has been down only. If you bought $ENA at TGE you would now be down over 57%. If you bought the pico top, you would be down over 82%…
While the gravity of pending unlocks certainly explain $ENA’s price action to some degree, it seems the future prospects of Ethena may also be coming into question.
In this AF post, we will revisit the Ethena thesis and explore whether or not these concerns are warranted. Additionally, we will outline alternative avenues for the protocol to monetize USDe’s success and accordingly entertain what the future may hold for Ethena.
Ethena’s Competitive Advantage + Market Headwinds
Stablecoin issuers have some of the widest structural moats in crypto. Their defensibility is ultimately downstream of the tendency for stablecoin standards to embed themselves in the fabric of crypto markets. While not a traditional stablecoin by definition, USDe has been no exception to this rule. Since its launch, Ethena has been able to cultivate an early moat stemming from four primary sources:
- CEX integrations – sUSDe has become increasingly acce