Ethena token economic reform, ENA rises 23% in 24 hours

The Ethena Foundation announced significant reforms to its tokenomics, with the ENA token rising 23% to $0.17 within 24 hours. The reforms include the cancellation of the monthly VC unlock schedule and a proposal to use protocol revenue to buy back ENA. ENA holders are voting to decide on the "fee switch," where 95% of the net income from Ethena's brand business will be used for programmatic purchases of ENA when the circulation of USDe reaches $7.5 billion, with the remaining 5% allocated for growth.

Ethena Labs and the Foundation have also reached a principled agreement to assign most of the intellectual property and economic benefits of the Ethena protocol to the Foundation and ecosystem, rather than to Ethena Labs shareholders. This agreement is expected to be announced in October. The reforms come as the supply of USDe has decreased from a peak of nearly $15 billion in October to below $5 billion, with part of its revenue relying on derivative funding rates, which have diminished as the crypto market cools.

In search of new sources of growth, Ethena announced last week a $1 billion facility with FalconX to bring USDe collateral into over-collateralized institutional loans. Additionally, Janus Henderson invested in ENA in June and is exploring USDe distribution, while Coinbase has also launched a savings product in collaboration with Ethena.