Ethena Ends VC Unlocks, Proposes Revenue-Driven ENA Buybacks
The Ethena Foundation is eliminating monthly venture capital unlocks and proposing a fee switch to link protocol revenue directly to token value.
Ethena's native token (ENA) surged 23% to $0.17 in a single day following the announcement of a sweeping economic overhaul. The move signals a strategic pivot by the Ethena Foundation to eliminate long-term selling pressure and create a direct link between protocol revenue and token value.
According to CoinDesk, the ENA token has doubled in price over the past week. The rally follows the Ethena Foundation's decision to end monthly venture capital unlock schedules. To further reduce supply overhang, the Foundation has purchased the remaining locked tokens from specific large seed investors. Additionally, token holders are currently voting on a "fee switch" proposal. If passed, this mechanism would direct 95% of net revenue from Ethena-branded businesses toward programmatic ENA buybacks, though this would only trigger once USDe circulation reaches $7.5 billion.
The Struggle for Stability
These changes come as Ethena navigates a volatile period for its synthetic dollar, USDe. The asset generates yield through derivatives funding rates, but its supply has plummeted to below $5 billion, down from a peak of nearly $15 billion in October. This decline occurred as broader crypto markets cooled and the funding rates that power USDe's yield dwindled.
To counter this contraction, Ethena has aggressively pursued institutional growth. The project recently announced a $1 billion facility with FalconX designed for overcollateralized institutional loans. The project has also secured high-profile backing, with Janus Henderson investing in ENA in June and Coinbase launching a dedicated savings product in partnership with Ethena.
Shifting Value to the Ecosystem
The overhaul is designed to solve two critical problems: the constant threat of VC sell-offs and the lack of clear utility for ENA holders. By removing the monthly unlock schedule and implementing buybacks, the project aims to transition ENA from a simple governance token into a value-capture asset.
Crucially, the Foundation has reached an agreement in principle to ensure that substantially all material intellectual property and economic upside from the protocol belong to the foundation and the broader ecosystem. This effectively decouples the protocol's success from the private equity holders of Ethena Labs, ensuring that the financial benefits of the network accrue to the token holders rather than private shareholders.
The Path Forward
Market participants are now watching the outcome of the fee switch vote and the recovery of USDe circulation. While the institutional facility with FalconX provides a new avenue for growth, the buyback mechanism remains contingent on USDe hitting the $7.5 billion threshold—a significant climb from its current sub-$5 billion level. The success of this overhaul depends on Ethena's ability to regain its previous scale while maintaining the new economic alignment between the protocol and its community.