Stop subsidies, exempt the giants, the intricate games of Ethena.

Written by: Maher, Foresight News

On September 25, Ethena officially announced via Twitter that the basis strategy for USDe would be aligned with Binance’s tokenized U.S. stocks and perpetual contracts. The next day, they released an announcement stating that starting at the end of this month, all token incentives and inflation linked to the growth of USDe will cease.

The price of ENA tokens has surged from $0.014 since September 16, reaching around $0.2, then after a brief fluctuation at the $0.2 mark, it climbed to around $0.28, recording nearly a 100% increase in ten days.

Behind the rise in ENA's price, is it driven by favorable stimuli or upgraded expectations? Or is it paving the way for the massive token unlock in early October?

Hedged returns expanding to tokenized U.S. stocks, growth subsidies turned off

On September 25, Ethena used Binance's bStocks tokenized U.S. stocks as collateral for spot assets and hedged related exposure through Binance stock perpetual contracts. Ethena's risk committee had previously approved the inclusion of tokenized stock basis trading in the USDe allocation strategy. Ethena has mainly constructed a delta-neutral income strategy for USDe by holding cryptocurrency spot assets and using derivatives for hedging.

According to the official website data, the current supply of USDe is approximately $5.5 billion. Ethena stated that the open interest in Binance's stock perpetual contracts exceeds $2.9 billion, with a year-to-date monthly compounded growth rate of 105%, and the past six months' annualized yield for stock basis has averaged 3.56%.

Guy Young, founder of Ethena, claimed that this is the most significant expansion of its funding mechanism since the launch of USDe. Ethena expects that as more traditional financial assets are brought on-chain, the future opportunities in the stock perpetual contract markets may significantly exceed those in the cryptocurrency perpetual contract market.

USDe is not a stablecoin like cash plus government bonds. It bundles a delta neutral strategy into dollars: holding the spot while simultaneously shorting an equivalent perpetual contract, earning returns from the funding rate paid by bulls to maintain leverage. Price fluctuations are hedged on both sides, with returns coming from the rates themselves.

From 2024 to 2025, this machine will operate swiftly. The funding rate for Bitcoin is weighted by the position size, annualized to about 11% for the entirety of 2024; the supply of USDe is expected to surge to approximately $14.8 billion by around October 2025. By August 2026, the contribution of cryptocurrency basis to returns will shrink to about 1%, and supply will decrease to below $5 billion.

Relying solely on the current derivatives funding rate difference in the cryptocurrency market can no longer support Ethena's growth logic, so the team chose to extend the same structure to the recently popular tokenized stocks.

Meanwhile, the growth subsidy for USDe is officially turned off.

This month, Ethena's official announcement stated that since the first airdrop in 2024, the token incentives related to the growth of USDe have decreased by about 85%. By the end of this month, all token incentives and inflation linked to USDe will cease and will no longer be distributed afterward.

Data from Crypto Briefing shows that since the protocol was launched, a total of more than $750 million in rewards have been distributed, helping USDe reach approximately $15 billion by October 2025; supply will then contract by more than 65%. The decline in incentives closely follows the cooling of cryptocurrency funding rates. Hitting zero by the end of the month means tightening the valve that has already been mostly closed, instead of abruptly withdrawing from a full state.

If the previous reform of hedged returns addressed the scaling issue, this update tackles the issue of "no longer diluting ENA to maintain USDe." In future expansions of USDe, there will no longer be additional printing of ENA to cover holding costs. Because incentives have already dropped by about 85%, the incremental selling pressure is limited, more refocusing the token economics from subsidized growth to "verifiable supply."

Large unlock on October 5

In August of this year, the Ethena Foundation announced that starting from October 5, 2026, all remaining original investors' vesting will be completed in advance, and thereafter there will be no investors' tokens remaining in a locked state; team tokens will still follow the original lock-up and vesting arrangements. The foundation stated that this aim is to eliminate the persistent supply shadow formed by monthly VC unlocks.

The original arrangement was a linear monthly vesting. After the cliff period ending in April 2025, the investor batch was approximately 7.8125 million ENA per month, released on the 5th of each month, originally planned to continue until March 2028; core contributors were about 9.375 million per month released on the same day; the foundation batch was about 4.0625 million monthly released on the 2nd of each month. After the reform in August, investor lines were canceled: the original planned remaining investor batch for about 17 months from November 2026 to March 2028 will be combined and released all at once on October 5, allowing investors to unlock about 17 months earlier than the original plan.

Team and foundation's monthly vesting are not included in this acceleration; on October 5, they will still release team regular batches according to the original plan.

Alongside the accelerated unlock, there is a buyout for those who have sold their holdings from the seed round. The foundation stated that it has bought some original allocations exceeding 0.25% of the total supply through over-the-counter transactions from key seed round investors who sold ENA after the market peak on October 10, 2025; a fair price repurchase offer was sent to investors who did not sell after the peak, but no one accepted; among the sellers' group, one wallet refused to be bought out. The foundation has not disclosed the buyout target, quantity, and consideration.

Additionally, one of the largest addresses holding ENA, StablecoinX, holds about 3.03 billion tokens, accounting for about 20% of the total supply, originally applicable to a 48-month lockup under PIPE trading terms. On September 14, StablecoinX signed a waiver with Ethena OpCo and Ethena Foundation, later disclosed via Form 8-K: starting from October 5, the lockup, vesting, and phased unlock restrictions on their held or to-be-delivered ENA will be permanently lifted, aligning with the release date announced by the foundation to other holders. Lifting of restrictions does not mean free sale. The document clarifies that the related tokens will still be held as inventory, and any sale, transfer, or disposal must first obtain written consent from the foundation; if sold for working capital or strategic needs, at least five business days written notice must be given, and the foundation has the right of first refusal at the proposed price.

In response, some community members expressed that the liquidity in the secondary market for ENA is highly concentrated and controlled. On the surface, the project party has abolished the lock-up period, but in reality, they have formed a pricing alliance to control market pricing power after October.

With only a week left until the large unlock, the day of unlocking may be when the market responds with capital.