The reason for the big pump of ENA has been found: the supply of USDe stablecoin has surged by 100%, breaking the 6 billion coin threshold.

Recently, the governance token ENA of the Decentralized Finance (DeFi) protocol Ethena has performed remarkably well, with a weekly pump of over 43%. As of today (21), it is reported at 0.4982 USD in early European trading, making it the second-best performing token among the top 100 by market capitalization. What underlying driving factors are behind this strong upward momentum?

Market analysis indicates that the surge of ENA is closely related to the explosive increase in the supply of its synthetic US dollar stablecoin USDe, as well as the upcoming launch of the "fee conversion" mechanism in the protocol. The supply of USDe has surpassed 6 billion coins, which not only marks an important milestone for the Ethena protocol but also reflects the growing demand and influence of stablecoins in the cryptocurrency ecosystem.

Catalyst for ENA's Pump: The Fee Conversion Mechanism is About to Launch

Kairos Research pointed out that the catalyst for ENA's surge this week is the market speculation regarding the upcoming activation of the "fee conversion" mechanism for Ethena staking ENA (sENA) token holders. This mechanism was initially proposed by the market maker Wintermute and approved by the Ethena Foundation in November 2024. Its core lies in allowing the sharing of protocol revenue with sENA holders.

These revenues mainly come from the minting fees of USDe (Ethena's synthetic dollar, with a market capitalization exceeding $6 billion) and other protocol revenue sources. However, to activate this fee-sharing mechanism, a series of specific parameters must be met:

1. The circulating supply of USDe exceeds 6 billion US dollars.

2. The protocol has accumulated revenue exceeding 250 million USD.

3. USDe is integrated into four of the top five centralized exchanges by derivative trading volume.

4. The scale of the reserve fund reaches 1% or more of the USDe supply.

5. Expand the staking of USDe (sUSDe)'s annualized yield and the interest rate spread between other benchmarks (such as Aave's USDC).

According to data tracked by Kairos Research, as of this Sunday, the circulating supply of USDe, accumulated protocol revenue, and reserve fund have all exceeded the aforementioned thresholds. Kairos Research stated on X: "The uniqueness of ENA lies in the fact that the fee conversion parameters have been established, but certain thresholds need to be met or exceeded for formal activation, in which case sENA holders will become the recipients of the fees."

The company also added that the final parameter, which is the tracking APY spread, has not yet been met, but market liquidity suggests that this may be achieved soon. The report noted: "Compared to other key benchmarks such as Maker/Sky’s sUSDS, the inflow of staking into sUSDe indicates that capital allocators expect the spread to widen, benefiting Ethena."

USDe supply surges: breaks through the 6 billion mark

In addition to the potential cost conversion initiation, the stablecoin USDe issued by Ethena Labs has surpassed a supply of 6 billion coins, setting a historical record, with the current supply at approximately 6,038,318,478 USDe. This milestone marks a significant increase in the circulation of USDe, reflecting the growing demand and adoption rate within the cryptocurrency ecosystem. The surge in USDe supply indicates a rising interest in stablecoins, which are typically used to hedge against the volatility of other cryptocurrencies. This development highlights the increasingly important role of stablecoins in the broader financial landscape, providing a stable store of value and medium of exchange for various transactions. The record high supply of USDe demonstrates investor confidence in the stability and practicality of this stablecoin, further solidifying its position in the market.

The increase in USDe supply can be attributed to several factors:

1. Increased Acceptance of Cryptocurrencies: As the acceptance of cryptocurrencies as a legitimate asset class continues to rise, the demand for stablecoins has increased. Investors seek stablecoins as a safe-haven asset during market volatility, and USDe has become a reliable choice.

2. DeFi platform applications: The application of stablecoins in Decentralized Finance (DeFi) platforms has also driven the surge in USDe supply. Stablecoins are used for lending and trading on DeFi platforms, and the increasing popularity of these platforms has driven demand for USDe.

3. Regulatory Clarity and Compliance: The regulatory clarity and compliance measures implemented by Ethena Labs have enhanced investor confidence, thereby increasing the adoption of USDe.

4. Overall Market Bullish Trend: In addition to the positive news surrounding the protocol itself, the overall bullish trend in the cryptocurrency market has also strengthened the upward momentum of the ENA Token. According to a recent report by CoinDesk, the protocol's USDe has attracted over $750 million in new capital inflow.

The importance of stablecoins in the financial ecosystem is increasingly enhanced

The supply of USDe has reached a historic high, marking a significant advancement in the cryptocurrency market. This reflects the growing demand for stablecoins in the market and their increasingly enhanced role in the financial ecosystem. The surge in USDe supply demonstrates investor confidence in the stability and utility of this stablecoin.

As the cryptocurrency market continues to evolve, stablecoins like USDe are likely to play an increasingly important role in providing a stable store of value and a medium of exchange for various transactions. This development highlights the significance of stablecoins in the broader financial landscape and their potential to fundamentally change the way we think about money and finance.

The surge of the ENA Token is not only a reaction from the market to the anticipated launch of the Ethena protocol's "fee conversion" mechanism, but also a direct manifestation of the successful expansion of its synthetic US dollar stablecoin, USDe. The supply of USDe has surpassed 6 billion coins, proving its stability, practicality, and increasing adoption rate in the cryptocurrency market. This development reaffirms the critical role of stablecoins in the digital financial ecosystem; they are not only hedging tools in volatile markets but also an important foundation for driving the development of DeFi and achieving large-scale applications of blockchain technology.