Written by: Xiao Bing

Ethena announced on September 25 that it will begin incorporating tokenized US stocks into its basis trading strategy for USDe, with Binance as the first execution venue, starting today.

Founder Guy Young stated, "This is the most significant expansion of the funding mechanism for USDe since its establishment."

Previously, Ethena's basis trading could only operate in the crypto perpetual contract market, holding BTC/ETH spot while shorting the corresponding perpetual contracts to earn funding rates. The ceiling for this market's scale is the total market capitalization of the crypto market, approximately $2.5 trillion.

The scale of the stock market exceeds $150 trillion.

Basis Trading from Crypto to Stocks: Same Logic, Different Underlying

First, let’s clarify the mechanics of this strategy.

Ethena's USDe (current supply about $4.9 billion) is a synthetic dollar, whose yield comes from "basis trading," maintaining both long spot and short perpetual positions to hedge price fluctuations against each other (delta neutral), with Ethena earning the funding rate paid by longs to shorts in the perpetual contract market.

Crypto version: Hold BTC spot + short BTC perpetual contracts = earn crypto funding rates.

Stock version: Hold bStocks (Binance's tokenized US stocks) + short Binance stock perpetual contracts = earn stock funding rates.

The structure is completely the same; the only change is that the underlying asset shifts from cryptocurrency to stocks.

Why Expand to Stocks Now?

To summarize: crypto funding rates are shrinking.

When leverage demand in the crypto market is strong, funding rates can reach up to an annualized 20% or even higher, and Ethena's yields increase accordingly. However, during market sideways or downturn phases, funding rates can compress or even turn negative, requiring shorts to pay longs.

The crypto funding rate environment in 2026 is clearly less favorable than in 2024. USDe needs new sources of yield to maintain its appeal to depositors.

Binance's stock perpetual contracts provide an alternative option. According to data from Ethena, the open contracts for Binance stock perpetual contracts have exceeded $2.9 billion, with a monthly compound growth rate of 105% projected for 2026. Over the past six months, the annualized yield for stock basis has averaged around 3.56%.

More critically, there is the ceiling on scale. The total volume of open contracts in the crypto perpetual contract market is about $15 billion, while the global stock market exceeds $150 trillion. Even if just one ten-thousandth of the stock market's volume enters on-chain perpetual contracts, the capacity available for Ethena’s basis strategy would far exceed the current crypto market.

Risks to Note

The same strategy applied to stocks has several key structural differences in risk compared to its crypto version.

bStocks Counterparty Risk. bStocks are issued by BTech Holdings Limited, providing economic exposure to the underlying US stocks, but holders do not have voting rights and do not directly hold the stocks themselves. Reports from Unchained indicate that Ethena's risk advisors have flagged a concern: bStocks legally constitute unsecured exposure to Binance affiliates, and this risk has not been mitigated before signing a side letter.

Weekend and Halt Gaps. US stocks do not trade over the weekend, but perpetual contracts may continue to be priced. This means that a gap may occur between Friday's close and Monday's open, locking the spot at Friday's price while the perpetual contracts continue to fluctuate. If a significant event occurs over the weekend (war, corporate scandal, macro shock), the spot price may gap up on Monday, instantly destabilizing the hedged position. The crypto market operates 24/7, avoiding this issue.

Funding Rates May Turn Negative. Like crypto perpetual contracts, the funding rates for stock perpetual contracts depend on the long-short ratio. If there are too many shorts (e.g., a surge of basis traders entering), the rates will compress or even require shorts to pay longs. In this case, Ethena would lose money instead of profiting. A 3.56% annualized average appears stable, but this is backtested data and does not guarantee the future.

Binance Concentration. Currently, Ethena's stock basis strategy is executed only on Binance. This means Binance is both the issuer of bStocks and the trading venue for perpetual contracts, also assuming counterparty risk. The entire chain relies on Binance, and this concentration is mitigated in the crypto version through multiple exchanges, but this is not yet possible in the stock version.

The Bigger Picture

For USDe depositors, stock basis represents a diversification of yield sources. When crypto funding rates are low, stock basis can provide alternative yields, reducing the volatility of USDe yields and dependence on the crypto market cycle.

What Ethena is doing, when looking at this week’s news matrix, points to a larger trend.

The SEC just granted a five-year "innovation exemption" for tokenized stocks, Ondo launched a BlackRock strategy-driven on-chain portfolio token, and Galaxy incorporated sUSDS into its public company balance sheets.

Now, Ethena has integrated tokenized stocks into a $4.9 billion synthetic dollar protocol as a core new component of its yield mechanism.

All of this is doing the same thing: making the boundaries between on-chain finance and traditional finance more blurred.

When the yield of a synthetic dollar can come from the perpetual contract funding rates of Apple and Nvidia stocks, the distinction between the terms "DeFi" and "TradFi" becomes increasingly meaningless.