The Real Adoption Dilemma Under the Ethena Capital Flywheel

In August 2023, a certain lending protocol offered an annual yield of 8% for DAI, and subsequently, a well-known investor invested 230,000 stETH in batches, at one point accounting for over 15% of the protocol's deposit volume. This forced the relevant parties to urgently propose to lower the interest rate to 5%. The subsidy plan originally intended to increase the usage of DAI nearly turned into a high-yield opportunity for a single investor.

In July 2025, Ethena rapidly increased the APY of sUSDe to around 12% through an innovative treasury strategy, while ENA surged 20% in a single day. This treasury strategy, originating from the Bitcoin ecosystem, was ultimately fully applied to USDe. Ethena successfully leveraged the capital markets to create a bidirectional growth model for ENA and USDe both on-chain and in the stock market.

Competition Landscape of the Stablecoin Market

In the stablecoin market, different projects have their own characteristics: some have created the concept of stablecoins, some focus on compliance, while Ethena focuses on capital operation.

After the launch of Ethena's treasury strategy, it initially appears to be a simple imitation of the current trend. However, upon deeper analysis, it is found that Ethena is actually attempting to break the inherent dilemma of the "dual currency" system. This dilemma refers to the fact that on-chain stablecoin issuers often need to make trade-offs between the price of the protocol token and the market share of the stablecoin.

For example, a certain protocol chooses to drive its token price up by 83.4%, but its stablecoin issuance is only 300 million USD. Another project saw its token price rise by 43.2% within three months, with stablecoin issuance reaching 7.5 billion USD. Meanwhile, Ethena's ENA increased by 94.2% in three months, while USDe's issuance reached 7.6 billion USD.

The difficulty in maintaining this balance is mainly due to limited protocol revenues. If profits are concentrated on increasing market share, the token price may become unstable; and vice versa.

Ethena has adopted a unique strategy by sharing ENA as a profit "option" with partners through an incentive mechanism, temporarily balancing the interests of all parties while prioritizing the protection of dividend rights for USDe holders. According to research institutions, Ethena has shared approximately $400 million in profits with USDe holders in the form of sUSDe since its establishment.

Innovation and Challenges Coexist

Ethena has not only surpassed some competitors in the stablecoin market share but also outperformed certain well-known projects in terms of major token performance. This is not a coincidence, but rather a result of Ethena's introduction of stock market treasury strategies, which have deeply transformed the value transmission method of the dual-token system.

Ethena's StablecoinX treasury strategy is ostensibly about injecting and raising funds through on-chain entities, spending $260 million to purchase 8% of the ENA circulating supply, which stimulates the rise in ENA prices. This move has received a positive market response, with Ethena's total locked amount, USDe supply, and sUSDe annualized yield all increasing.

However, Ethena's real challenge lies in achieving the widespread use of USDe. Currently, the application of USDe in cross-border payments, tokenized funds, and exchange pricing is still limited. If Ethena's goal is only confined to on-chain DeFi, then it has already achieved considerable success. However, there is still a long way to go to truly penetrate the fields of off-chain institutions and retail users.

In addition, ENA faces new challenges. With the introduction of the fee switch mechanism, ENA holders will share protocol revenue through sENA. This means that ENA may shift from being a revenue source for Ethena to a liability. Only by truly becoming a stablecoin similar to USDT/USDC can ENA enter a real self-sustaining cycle.

Conclusion

Ethena's capital operation provides a new approach for other stablecoin and interest-bearing stablecoin projects. However, capital stimulation is merely a pacemaker; true sustainable development still relies on stable returns brought by practical applications. In this regard, Ethena, like many similar projects, still faces long-term challenges.