Ethena hadn’t even launched its signature product before facing a wave of criticism. USDe was too risky to be labeled a “stablecoin,” critics said. After all, it wasn’t over-collateralized like most crypto-backed stablecoins. Instead, Ethena used a delta-neutral trading strategy to maintain USDe’s peg to the US dollar and generate outsize yield. It might not have been an algorithmic stablecoin like Terra’s UST, but it wasn’t Liquity’s LUSD, either. 

That controversy is now a distant memory. Ethena quickly rebranded USDe as a “synthetic dollar,” and within weeks of its 2024 launch it had become one of the largest dollar-pegged tokens on the market. 

Today, it holds the fourth spot, behind USDT, USDC, and USDS. It has a market capitalization of nearly $5 billion. And Ethena’s ambitions have grown; it’s now pushing USDe into consumer payments and expanding the token’s collateral base. 

Still, USDe has proven more volatile than peers. A year ago, USDe had a market capitalization of nearly $15 billion. USDT and USDC, meanwhile, held steady over the past 12 months. USDS has actually seen a 55% increase in its market cap. 

With that in mind, we thought it would be a good time to take a fresh look at Ethena. Our latest research report details its original business model, its expansion, and its Wall Street flop. 

Most retail investors have likely never heard the term “delta-neutral basis trade.” Here’s how Ethena uses it to maintain USDe’s peg.  

USDe was long backed by Ether and other leading cryptocurrencies. That is, if someone wanted USDe, they had to borrow it and post crypto as collateral. Other stablecoin issuers do this too, but they typically require borrowers to post more than a dollar of crypto for every dollar of stablecoin. That way, if the crypto depreciates, there’s enough to ensure the collateral is still worth more than the loan.

Ethena’s founders realized the collateral was effectively a long position on crypto. By opening an equal short position in the matching perpetual futures market, Ethena had two positions that negated each other. If the collateral appreciated, the short lost money in equal measure. The reverse was also true. 

That left Ethena with the funding rate, the regular payment that traders on one side of a perpetual market pay the other to keep the perp price close to the spot price. When markets are bullish or neutral, funding is usually positive, and shorts like Ethena get paid. That’s what funded USDe’s yield. 

But this has changed rather dramatically. As of Tuesday, crypto used in the basis trade was only the third-largest collateral source backing USDe. “DeFi lending” and “liquid stables” comprise one-third and one-quarter of USDe collateral, respectively, according to Ethena. The crypto basis trade accounts for a mere 18% of USDe collateral. 

The latest collateral source is a basis trade funded by real-world assets rather than crypto. Earlier this year, Ethena began using tokenized stocks in the very same way it uses Ether and other cryptocurrencies. 

The equity basis trade has averaged about 3.56% annualized over the past six months, according to figures Ethena shared with the press. Founder Guy Young called it the most significant expansion of USDe's funding mechanism since launch, pointing to the size of global equity markets.

If these changes draw new users to USDe, it could have large implications for the protocol and its stakeholders. That’s because investors who hold the Ethena governance token, ENA, recently voted to “flip” the protocol’s “fee switch.” 

In plain English, that means a share of protocol revenue will be used to fund ENA buybacks — but only once USDe supply tops $7.5 billion. 

For more on the fee switch, Ethena’s embrace of tokenized stocks, and ENA’s Wall Street flop, read our full report here.

Talking tokens (and market makers)

Say you're sizing up a token. The TVL looks healthy, and the volume looks fine. Would you buy it?

You may have seen recently that DefiLlama combined their data with Forgd to help answer that. Universal Token Ratings, updated in real time, scores 181 tokens (172 with an active rating) on how much their teams disclose and how well they trade. Both matter, so a token can't coast on one strength. The Market Maker Leaderboard ranks 43 firms on a token's liquidity by pricing, depth, reliability, and execution quality across tokens, venues, and market conditions. 

Forgd CEO Shane Molidor and our own Ryan Celaj dig into what makes a token investable on Talking Tokens, from what institutions expect to why market makers overpromise.

Watch the episode here.

And with the explosive growth of tokenized stocks throughout 2026, it’s a no-brainer that the llamas now track equities, tokenized or not, with their own bespoke, data-fueled dashboard.

Recently, the team expanded the Equities dashboard to include earnings calls for its 2,786 tracked companies, market maps and rotation trackers for 143 industries and 11 sectors, and more.

Dig into rankings by market cap, revenue, and P/E, see how much market cap is at stake in upcoming earnings, and pull up full financial statements for any company, all backed by SEC filings. That’s only scratching the surface.

Stocks, tokens, onchain or off, it's all in one place. Explore the Equities dashboard here.