What is Ethena and USDe?

Ethena is a crypto protocol that issues USDe, a token designed to stay worth about one US dollar. Ethena calls USDe a synthetic dollar. Instead of holding cash in a bank, it holds crypto and similar assets and cancels out their price swings with an opposite bet in the futures market.

What is USDe and how is it backed?

A regular stablecoin such as USDC is backed mostly by cash and short-term government debt. USDe works differently.

When an approved trader mints new USDe, for example by depositing about $100 of USDT, Ethena opens a short position of roughly the same size in a perpetual futures contract on a derivatives exchange. If the price of a volatile backing asset falls, the short gains about as much as the asset loses, and the reverse. This is called a delta-neutral position. Part of the backing is also kept in stablecoins and short-dated real-world assets, which need no hedge.

The backing is held with outside custodians rather than handed to the exchanges, which Ethena says reduces the damage if an exchange fails. The futures side of this setup is explained in crypto futures and leverage.

Only approved market makers that pass identity checks can mint or redeem USDe directly with Ethena. Everyone else buys or sells it on exchanges and trading pools.

Where does the sUSDe yield come from?

Holders can stake USDe to receive sUSDe, Ethena's savings token. Its value in USDe rises when rewards are paid in.

Those rewards come from the backing strategies. The biggest is the funding rate, a periodic payment between buyers and sellers of perpetual futures. Historically, buyers have usually paid sellers, so a short position tends to collect money. Ethena also earns from staked ether, lending and stablecoin holdings.

Ethena's documents say the sUSDe product is not offered to residents of the European Union, and staking is limited to permitted jurisdictions.

What is the ENA token?

ENA is Ethena's governance token. Holders vote on matters such as what backs USDe, new strategies, and how protocol revenue is used. ENA can be staked as sENA. The token launched on March 5, 2024, and team and investor tokens vest over four years.

What are the risks of USDe?

Ethena's own risk list includes funding risk, liquidation risk, custody risk, exchange failure and risks in the backing assets.

Funding risk is the main one. When funding turns negative, short sellers pay instead of collect. Ethena says it keeps a reserve fund to cover periods of negative revenue, and that rewards are typically not paid during those periods.

USDe has also traded well below a dollar on a single venue. During a market crash on October 10 to 11, 2025, it briefly fell to about $0.65 on Binance while trading near $1 elsewhere, according to Crypto Briefing, which reported that Ethena processed more than $2 billion of redemptions within 24 hours. See what happens when a stablecoin depegs.

USDe is not a bank deposit, and Ethena's own documents set out the risks above in detail.