Ethena's USDe Soars to $7.3B with 10% APY as ENA Rallies 130% on $260M Buybacks

Ethena’s USDe, a yield-bearing stablecoin, has surged into the spotlight as a $7.3 billion asset following a $2 billion influx in July 2025, positioning it as the third-largest stablecoin after USDT and USDC [1]. This rapid growth is driven by a 10% annual percentage yield (APY) on staked sUSDe, one of the highest risk-adjusted returns in decentralized finance (DeFi). Over the past 30 days, Ethena’s protocol generated $30.85 million in fees, reflecting robust user demand for staking USDe [1]. The stablecoin’s success is underpinned by a novel yield engine that leverages crypto market volatility, capturing funding premiums from perpetual futures trading. By taking short positions during bull markets, Ethena collects fees that are subsequently funneled into $260 million in ENA buybacks, creating a flywheel effect that amplifies demand for its native token.

The surge in USDe deposits has directly fueled ENA’s 130% price rally in July, outpacing broader market trends. This performance aligns with a broader risk-on sentiment in crypto, where nearly $200 billion flowed into altcoins excluding Bitcoin and Ethereum [1]. Ethena’s strategy diverges from traditional stablecoins like USDT and USDC, which derive yields from U.S. Treasury holdings and allocate profits to Bitcoin reserves. Instead, Ethena’s model exploits perpetual futures markets, where long-position traders pay funding fees to short-side participants. By capturing these premiums, Ethena converts market volatility into revenue, which is then reinvested into token buybacks. Between July 22 and 25, 83 million ENA tokens—1.3% of the circulating supply—were repurchased across public venues, signaling strong institutional support for the buyback initiative [1].

The protocol’s institutional traction has also expanded, with Anchorage Digital and Ethena Labs launching USDtb, a stablecoin compliant with the U.S. GENIUS Act. This regulatory alignment positions Ethena to attract institutional capital while navigating evolving compliance frameworks. However, the sustainability of USDe’s growth hinges on the persistence of favorable market conditions. If crypto volatility subsides or funding premiums shrink, the yield engine’s effectiveness could wane, potentially slowing inflows. Analysts note that Ethena’s model is distinct from traditional stablecoins, relying on market dynamics rather than diversified reserves. This introduces counterparty risk tied to the crypto ecosystem’s inherent volatility.

While USDe’s market cap growth underscores its role in reshaping DeFi’s stablecoin landscape, challenges remain. Competitors like TerraUSD and FRAX have yet to match Ethena’s yield incentives, but they may respond with similar mechanisms. Additionally, regulatory scrutiny of stablecoin liabilities could impact Ethena’s operations, particularly as U.S. policymakers intensify oversight of tokenized assets. For now, Ethena’s flywheel model has proven effective, but its long-term viability will depend on the resilience of its yield-generating strategy and its ability to adapt to shifting market and regulatory environments.

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[1] [Ethena’s $7.3B move: Is USDe the next center of gravity in DeFi’s stablecoin wars?](https://ambcrypto.com/ethenas-7-3b-move-is-usde-the-next-center-of-gravity-in-defis-stablecoin-wars/)