Most stablecoins are backed by dollars sitting in a bank. USDe is backed by a trade. Ethena built a synthetic dollar that holds its peg using crypto and derivatives instead of bank deposits, and it grew into one of the largest dollar tokens in crypto. ENA is the protocol's governance token. This guide explains the mechanism in plain words, because with Ethena the mechanism is the whole story.
What is Ethena?
Ethena is a protocol launched in February 2024 by Ethena Labs, founded by Guy Young. It has two tokens. USDe is a synthetic dollar designed to hold a value of $1. Stake USDe and you get sUSDe, a version that earns the protocol's yield. ENA is the governance token, used to vote on how the protocol runs.
USDe is not like USDC or USDT. Those hold dollars and Treasury bills in reserve. USDe holds a market position instead, which is why people call it a synthetic dollar rather than a stablecoin, and why its risk profile is genuinely different.
How USDe works, in plain words
The trick is called delta neutrality, or the basis trade. For every dollar of USDe issued, the protocol holds roughly a dollar of spot crypto, mostly ETH and BTC, and opens an equal short position in perpetual futures on the same assets. When the price rises, the spot holding gains and the short loses; when it falls, the short gains and the spot loses. The two cancel out, so the combined position stays at a dollar regardless of what the market does.
The yield comes from the same trade. In perpetual futures markets, longs pay shorts a funding fee when sentiment is bullish, which is most of the time, and the staked ETH in the position earns staking rewards on top. That income flows to sUSDe holders. The rate has ranged from about 4 percent to above 15 percent annualized depending on market conditions, sitting around 7 percent in mid-2026. High yields mean excited markets, not magic.
Growth, and the stress test
USDe grew from launch to over $14 billion in supply by 2025, briefly the third-largest dollar token in crypto. Then came the exam. During the flash crash of October 10, 2025, USDe briefly traded down to $0.97 on some venues before recovering within hours. The peg held, but the episode showed the design's sensitivity to violent markets, and supply contracted to around $4.4 billion by mid-2026 as leveraged positions across DeFi unwound.
The protocol's response was to institutionalize. Since January 2026, Kraken Custody warehouses the backing assets in bankruptcy-remote cold storage with weekly proof-of-reserves reporting. USDe also carries regulatory scars: it exited the EU and EEA after Germany's BaFin barred it under MiCA rules.
Where Ethena stands in August 2026
The current narrative is traditional finance walking in. In July 2026 USDe became a leading stablecoin on the newly launched Robinhood Chain and the primary collateral for Robinhood's Earn product, and it was added to BlackRock's Aladdin platform. Asset manager Janus Henderson took an ENA position through its blockchain unit, had its AAA-rated CLO strategy added to the mix of assets backing USDe, and is planning regulated Ethena-linked products for later in 2026. There is even a Hyperliquid connection: HyENA, a perpetuals exchange built on Hyperliquid since December 2025, uses USDe as collateral.
For ENA itself, the story is supply and the fee switch. ENA has a maximum supply of 15 billion tokens, about 9.8 billion were unlocked as of August 2026, and the next unlock lands on September 2, 2026. The protocol ran an $890 million ENA buyback program in 2025, and a governance vote is pending on activating the fee switch, which would share protocol revenue with ENA stakers for the first time.
How to trade ENA on Based
Based is a self-custody wallet that connects you to the ENA perpetual futures market on Hyperliquid. Fund the wallet with USDC and trade long or short, with leverage if you choose, 24/7. No exchange account, no application.
Keep the instrument straight. An ENA perp is a derivative tracking the token's price. It is not ENA, it carries no governance rights and no claim on any future fee-switch revenue, and it has liquidation risk and funding fees while open. If you are bullish on Ethena's revenue, understand whether you want the token, the yield on sUSDe, or a leveraged bet on the price, because they are three different exposures.
The honest risks
Ethena's risks are specific, not generic. If funding rates go deeply negative for a sustained period, the same trade that pays yield starts costing money, and the protocol's reserve fund is thin relative to its size. USDe has depegged before, briefly, and the design has only existed since 2024. The mechanism is far more complex than holding USDC, and complexity is where things break. ENA adds token unlocks on top, and an ENA perp adds leverage, liquidation and funding on top of that.