Ethena’s strategy for scaling USDe supply and ENA buybacks

Ethena Foundation plans to route 95% of net revenue into automated ENA purchases once USDe supply reaches $7.5 billion. The current $5 billion supply requires 50% growth to activate the fee switch. At that $7.5 billion threshold, the Foundation estimates $22.5 million in annualized revenue assuming a 6% APY. This strategy targets ENA holders by reducing distributions to USDe holders to fund token buybacks. The Foundation also conducts OTC buyouts of locked ENA from seed investors who hold allocations greater than 0.25% of the total supply because these investors already sold their stakes after ENA hit a peak in October 2025. The Foundation also plans to consolidate investor token unlocks into a single event on October 5, 2026. ENA surged 16-23% intraday to around $0.17 following the buyback announcement. Ethena’s USDe has already climbed to become the third-largest stablecoin, following Tether’s USDT and Circle’s USDC. The user base grew by 72% to reach over 32,500 holders by October 2025. USDe recently saw an inflow of $3.14 billion over a 20-day period. USDe supply also grew toward $8.4 billion in a single month of activity, which shows the momentum of the asset.

Sky’s yield competition

Sky’s sUSDS yield provides a direct comparison for Ethena’s sUSDe returns. On October 26, 2026, the sUSDS Ethereum pool paid 3.80% APY on $4.85 billion in assets. In October 2025, sUSDe yield fell to 3.83% as market dislocations occurred. You should monitor the basis trade revenue to see if Ethena can keep its yield advantage.

Sky’s USDS supply reached $6.81 billion on October 26, 2026, which makes it the third-largest dollar stablecoin. Sky uses a Peg Stability Module that held $4.1 billion in liquidity as of June 2026 to maintain its value. This module enables users to swap USDC and USDS 1:1 with no fees. The Sky protocol holds $15.89 billion in collateral against $10.00 billion of combined USDS and DAI. Sky’s USDS is the upgraded successor to DAI and it converts 1:1 with DAI in both directions, which ensures that liquidity remains available for all existing holders. Spark, a Sky agent, manages $5.63 billion in deposits on September 27, 2026. The total stablecoin market cap reached $316 billion at the time of writing, with monthly transaction volumes exceeding $4 trillion.

Risk and peg resilience

Ethena relies on delta-neutral hedges using long and short Bitcoin positions to generate yield for sUSDe. This model faced stress during the October 10 market correction when USDe traded as low as 0.65 USDT on Binance. On-chain liquidity pools on Fluid, Curve, and Uniswap remained anchored around 0.99 throughout that event. Sky uses a different model with overcollateralized positions and a Peg Stability Module. Sky reported $15.89 billion in collateral against $10.00 billion of combined USDS and DAI on October 26, 2026. Ethena’s USDe supply reached $14.8 billion in early October 2025 before it retracted to $10.1 billion, which was a 31.4% decline by the end of the month. The protocol backing ratio for USDe remained at 100.57% during that period. The market saw USDe redemptions of $1.9 billion, or 13% of supply, between October 10 and 11, which settled orderly without Reserve Fund usage. DEX liquidity for USDe fell from $252 million on October 1, 2025, to $196 million on October 29, 2025. This followed a market correction where the total crypto market capitalization fell 21 percent, or $850 billion, in October. Can Ethena maintain its peg if funding rates turn negative during a massive supply expansion?