ENA Token Surges 47% on Fee-Sharing Mechanism Expectations

Ethena's native token, ENA, has seen a significant surge in value, increasing by 47 percent over the past week. This rise is not merely due to general market activity but is driven by specific expectations surrounding Ethena's unique fee-sharing mechanism, known as a "fee-switch."

According to analysis firm Kairos Research, Ethena has already established the technical infrastructure for this fee-sharing system. However, certain conditions must be met for the system to become operational. Once activated, the fees collected by the protocol will be distributed directly to sENA (staked ENA) holders. Most of these conditions have already been satisfied. The circulating supply of Ethena's US dollar-pegged stablecoin, USDe, has reached $6.08 billion, surpassing the $6 billion threshold. The protocol's cumulative revenues have reached over $431 million, well above the $250 million threshold. Additionally, the reserve fund size has been set to exceed 1% of the USDe supply.

Despite these achievements, two key criteria remain unmet. First, USDe must be traded on at least four of the five highest-volume derivatives exchanges, but currently, it is only traded on three. Second, sUSDe's spread remains below the targeted 5% to 7.5% range. The current spreads are 3.03% against AAVE's USDC pool, 2.48% against US Treasuries, and 2.05% against Maker/Sky's sUSDS product.

Investor interest in Ethena has surged, with sUSDe's 30-day average annualized return reaching 5.59%, and the current return at 9.74% at the time of writing. Institutional investors, in particular, are optimistic that these returns will become even more attractive over time and are pouring capital into the Ethena ecosystem. These developments are considered the main factors supporting the recent price increase in the ENA token.