Ethena is the protocol behind USDe, a synthetic dollar backed by a crypto trade instead of money in a bank, and ENA is its governance token. Most stablecoins keep dollars in reserve. USDe keeps spot crypto plus an offsetting short position, and that design grew into one of the largest dollar tokens in crypto. Once the mechanism clicks, everything else about Ethena follows from it.
What is Ethena?
Ethena Labs, founded by Guy Young, launched the protocol in February 2024. There are two tokens to know, plus a staked version of one. USDe is a synthetic dollar designed to be worth $1. Stake USDe and you get sUSDe, which earns the protocol's yield. ENA is the governance token, used to vote on how the protocol runs.
USDe works differently from USDC or USDT, which hold dollars and Treasury bills. USDe holds a market position. That's why people call it a synthetic dollar rather than a stablecoin, and why its risks are different. If stablecoins are new to you, the USDC guide covers the conventional kind.
How USDe holds $1
The technique is called delta neutrality, or the basis trade. Take 1,000 USDe. Behind it, the protocol holds roughly $1,000 of spot crypto, mostly ETH and BTC, plus a short position of the same size in perpetual futures on those assets. If ETH rises 10 percent, the spot side gains about $100 and the short loses about $100. If ETH falls, it's the reverse. Either way, the combined position stays near $1,000.
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 goes to sUSDe holders. The rate has ranged from about 4 percent to above 15 percent annualized depending on market conditions, and sat around 7 percent in mid-2026. A high rate means an excited market, nothing more mysterious.
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 it got tested. 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 how sensitive the design is to violent markets, and supply contracted to around $4.4 billion by mid-2026 as leveraged positions across DeFi unwound.
Ethena responded by institutionalizing. Since January 2026, Kraken Custody has held 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 September 2026
Traditional finance is 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 assets backing USDe, and is planning regulated Ethena-linked products for later in 2026. There's a Hyperliquid connection too: HyENA, a perpetuals exchange built on Hyperliquid since December 2025, uses USDe as collateral. In September Ethena launched Ethena Pay, a savings and payments app on Avalanche that holds balances in USDe. It started as a limited beta and isn't available in the US or EU yet.
For ENA itself, watch supply and the fee switch. ENA has a maximum supply of 15 billion tokens, and about 10.1 billion had been released from vesting by late September 2026. The next scheduled release lands on October 2, 2026, and a bigger one follows: the Ethena Foundation bought unvested tokens from some early investors and collapsed the rest of the investor vesting into a single release starting October 5, 2026. On the demand side, the protocol ran an $890 million ENA buyback program in 2025, and in September 2026 ENA holders approved a fee switch that sends protocol revenue to ENA buybacks once USDe supply reaches $7.5 billion. USDe supply was around $4 billion during the vote, so those buybacks aren't running yet.
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, without an exchange account or an application.
First decide which Ethena exposure you want, because there are three. Holding ENA gets you governance votes and exposure to fee-switch buybacks, if USDe grows enough to trigger them. Holding sUSDe gets you the yield. An ENA perp gets you neither: it's a derivative tracking ENA's price, with liquidation risk and funding fees while it's open. The perp is the right tool only if what you want is a view on the price.
What could break it
Ethena's risks are specific. If funding rates go deeply negative for a long stretch, the trade that pays the yield starts costing money, and the protocol's reserve fund is thin relative to its size. USDe has depegged briefly before, and the design has only existed since 2024. It's far more complex than holding USDC, and complex systems have more places to fail. ENA adds scheduled supply releases on top, and a leveraged ENA perp adds liquidation and funding costs on top of that.