Ethena (ENA)

Ethena issues USDe, a synthetic dollar that is not a claim on a bank account. Crypto assets serve as backing while the protocol simultaneously holds an equal short position in perpetual futures: gains and losses on price offset each other, and the combined value stays near a dollar. The design touches the banking system nowhere, and depends on the derivatives market everywhere.

The return comes from the funding rate paid on the short leg plus staking rewards on the backing, and it is captured by moving USDe into its yield-bearing form. The weakness follows just as directly: a sustained negative funding rate turns the structure into a cost. The backing itself sits with off-exchange custodians and only margin is posted to venues, which reduces exchange risk without removing it.

ENA is the protocol's governance token. It does not back USDe and grants no claim on its reserves; it sets the system's parameters.

The structure's income disappears and turns negative when funding rates stay negative for long — the acknowledged weak point of the model.