Summary

Multicoin Capital announced an investment in the ENA token of the Ethena protocol and elaborated on the core logic for their long-term bullish outlook. Ethena issues the synthetic dollar stablecoin USDe, which has become the third-largest digital dollar stablecoin and achieves over 10% annualized yield via a basis trade strategy.

Core Thesis

* Market Positioning: Ethena sits at the convergence of three major trends: stablecoins, the "perpification" of assets, and asset tokenization, establishing a leading position in the yield-bearing stablecoin sector.

* Yield Advantage: Through a delta-neutral basis trade strategy, USDe offers significantly higher yields than Treasury-backed stablecoins and exhibits a mild negative correlation with the Fed Funds Rate.

* Risk Management: The team has successfully navigated major stress tests, including the Bybit hack and the October 11th market crash, proving the protocol's risk management capabilities.

* Growth Potential: The protocol is expanding through new product lines like white-label services and third-party perpetual DEXs, with future potential benefits from emerging markets like tokenized stocks.

* Value Capture: The ENA token has a clear value accrual path. The protocol has generated approximately $450 million in annual revenue, with future value distribution planned via a "fee switch."

Development Prospects

J.P. Morgan predicts that interest-bearing stablecoins could capture 50% of the stablecoin market. Ethena, with its first-mover advantage, technical team, and risk management capabilities, is well-positioned to be a major player in this transition. The successful integration of USDe as collateral on major exchanges like Binance and Bybit provides a solid foundation for continued growth.

(Source: Multicoin Capital | Compiled by: Golden Finance)

We are proud to announce that Multicoin Capital's liquid fund has invested in the ENA token—the native token of the Ethena protocol, the issuer of USDe, the leading synthetic dollar stablecoin.

In our article "The Endgame for Stablecoins," we posited that stablecoins represent the largest potential market in crypto, and yield is the ultimate competitive frontier. While we correctly identified the direction for yield-bearing stablecoins, we underestimated the market size for synthetic dollars.

We categorize stablecoins into two types:

1. Yield-sharing stablecoins

2. Non-yield-sharing stablecoins

Yield-sharing stablecoins can be further divided into:

* Those fully backed 1:1 by government-backed treasury assets.

* Those not fully backed by treasuries, i.e., Synthetic Dollars.

Synthetic dollars are not backed solely by government-backed treasury assets but generate yield and achieve price stability by executing delta-neutral trading strategies in financial markets.

Ethena is a decentralized protocol and the operator of the largest synthetic dollar, USDe. It aims to provide an alternative to traditional stablecoins like USDC and USDT, whose reserve assets roughly earn short-term U.S. Treasury yields. USDe's reserves generate yield and target stability through basis trading—a massive and proven strategy in TradFi.

Basis trading in U.S. Treasury futures alone is a multi-hundred-billion (possibly multi-trillion) dollar market. Until now, only qualified investors and institutional buyers could access hedge funds with the infrastructure for large-scale basis trading. Crypto is fundamentally restructuring the financial system by tokenizing these opportunities for everyone.

Systemic Tailwinds for Synthetic Dollars

Ethena sits precisely at the convergence of three powerful trends reshaping modern finance: Stablecoins, Perpification, and Asset Tokenization.

Stablecoins

The total stablecoin supply exceeds $300 billion and is expected to grow to trillions by the end of the decade. USDT and USDC have dominated for nearly a decade, comprising over 80% of the supply. Neither shares yield directly with holders, but we believe yield-sharing will become the norm over time.

We see stablecoin competition and differentiation across three core dimensions: Distribution, Liquidity, and Yield.

* Tether built superior liquidity and a global distribution network for USDT.

* Circle expanded distribution by sharing economics with partners like Coinbase—a strategy that drove growth but pressured margins.

As crypto adoption accelerates, we expect more companies with vast distribution networks in finance and tech to issue their own stablecoins, further homogenizing the treasury-backed stablecoin market. For new entrants in the digital dollar space, the primary way to stand out is by offering higher yield.

Among all new entrants, Ethena is the only one achieving significant distribution and liquidity, largely due to its higher yield. Based on sUSDe's price action since launch, we estimate its annualized yield is slightly above 10%—more than double that of treasury-backed stablecoins. This is driven by its basis trade strategy, which profits from the market's leverage demand. The protocol has generated nearly $600 million in revenue, with over $450 million in the last 12 months.

We believe the true test for synthetic dollar adoption is acceptance as collateral on major exchanges. Ethena excels here, having integrated USDe as core collateral on large CEXs like Binance and Bybit—a key driver of its rapid growth.

Another unique aspect of Ethena's strategy is its mild negative correlation with the Fed Funds Rate. Unlike treasury-backed stablecoins, Ethena stands to benefit from falling rates, as lower rates stimulate economic activity, increase leverage demand, push up funding rates, and strengthen the basis trades underpinning Ethena's yield.

Finally, J.P. Morgan predicts yield-bearing stablecoins could capture up to 50% of the stablecoin market in the coming years. With the total stablecoin market poised to soar into the trillions, we believe Ethena is well-positioned to be a major player in this transition.

Perpification

Perpetual futures have achieved strong product-market fit in crypto. In the ~$4 trillion crypto asset class, perps trade over $100 billion daily, with total open interest exceeding $100 billion across CEXs and DEXs. They offer a simple way for investors to get leveraged exposure. We believe more asset classes will adopt the perpetual format—what we call "perpification."

A common question about Ethena is its potential market size, as its strategy is constrained by the open interest in perpetual markets. We agree this is a reasonable constraint near-term but believe it underestimates the medium-to-long-term opportunity.

* Perpetuals for Tokenized Stocks: The global equity market is ~$100 trillion (~25x the entire crypto market). Participants have a strong demand for leverage, evidenced by the explosion of 0DTE options. Perpetuals for tokenized stocks could directly meet this demand and are easier to understand than options for most investors. As equities tokenize, stock perps could unlock a massive new opportunity for Ethena, potentially expanding the basis trade capacity by orders of magnitude.

* New Distribution from Fintechs Integrating Decentralized Perp DEXs: As the crypto regulatory environment becomes more favorable, global fintechs should increasingly embrace crypto. Many have already integrated DeFi middleware for spot trading of long-tail assets. We believe this user base represents significant unmet leverage demand. As decentralized perp DEXs go mainstream, fintechs will naturally integrate these products, creating new distribution channels, boosting volume and open interest, and thus expanding the capacity and scalability of the basis trades backing Ethena.

Tokenization

A core strength of crypto is that anyone can issue and trade tokens seamlessly. Tokens can represent any valuable asset. The closest analogue in TradFi is the ETF. Tokenization goes far beyond ETFs—it makes holding and transacting assets faster, cheaper, and more convenient, while also improving distribution and capital efficiency. We envision a future where global fintechs become primary distributors of tokenized strategies.

Ethena initially entered the market by tokenizing the basis trade. Over time, it can diversify its yield sources. It's already doing this: when basis trade yields are low or negative, Ethena can shift some collateral to USDtb—a stablecoin backed by BlackRock's tokenized treasury fund BUIDL—to maintain stability and optimize yield.

The Bull Case for ENA

Beyond the long-term bullish logic for Ethena's potential market size, understanding the team and protocol qualities—especially regarding risk management, value capture, and future growth opportunities—is crucial.

The Team

According to our interactions, Founder and CEO Guy Young has proven to be one of the sharpest, most strategic thinkers in DeFi. He brought his experience from Cerberus Capital Management to the rapidly financializing crypto market. His success is supported by a lean but experienced team (~25 operators), including CTO Alex Nimmo (an early BitMEX employee who witnessed the rise of perps) and COO Elliot Parker (formerly of Paradigm Markets and Deribit, whose relationships underpinned key integrations). The results speak for themselves: Ethena became the largest synthetic dollar issuer in under two years, integrating with top CEXs and establishing hedging relationships many projects take years to build.

Risk Management Capabilities

Ethena is a prime example of the principle that DeFi protocols which manage risk must charge fees. The protocol has demonstrated robust risk management, successfully navigating two major stress events this year alone, each reinforcing its credibility, resilience, and brand trust.

1. The Bybit Hack (Feb 21, 2025): This real-world stress test of Ethena's exchange counterparty model saw no impact on Ethena's strategy. Hedging positions and collateral were spread across multiple platforms and secured by off-chain custodians.

2. The October 11th Flash Crash: During this extreme deleveraging event, USDe traded as low as ~$0.65 on Binance due to oracle design issues, but maintained parity on more liquid venues like Curve, and redemptions functioned normally. This indicated a platform-specific price dislocation, not a systemic de-peg.

In both events, the team communicated transparently, no user funds were lost, and the protocol operated normally, processing billions in redemptions verifiable on-chain. Successfully navigating such stress tests at scale builds trust, credibility, brand equity, and competitive moats.

Value Capture Potential

We believe Ethena has the ability to charge higher fees compared to stablecoins like USDC. Unlike USDC, Ethena actively manages market risk, generally provides users with higher yield, and is likely negatively correlated with rates in the near-to-medium term—all factors enhancing its ability to capture and sustain long-term value.

While the ENA token currently functions primarily as a governance token, we see a clear path to value accrual. Ethena generated ~$450 million in revenue last year, none of which is currently distributed to ENA holders. A "fee switch" proposal outlined milestones for value distribution, all met prior to the October 11th crash except for USDe supply, which we expect to exceed $10 billion before the switch is activated. We believe these developments will likely be viewed positively by public markets.

Long-Term Growth Potential

On its existing business alone, Ethena is already one of crypto's highest-revenue protocols. Ethena is leveraging its leadership to launch new product lines building on its core strengths:

* Ethena Whitelabel: A "Stablecoin-as-a-Service" offering for large blockchains and apps (e.g., megaETH, Jupiter, Sui via SUIG).

* HyENA and Ethereal: Two third-party perpetual DEXs built using USDe as collateral, expanding USDe's utility and bringing trading fee revenue into the Ethena ecosystem.

These potential product lines will further cement Ethena's lead in synthetic dollars and allow it to capture economic benefits from these initiatives, complementing its already strong revenue.

Why We Are Long-Term Bullish on Ethena

Ethena has carved out a unique niche within the stablecoin market long dominated by USDT and Circle, becoming the clear market leader in the synthetic dollar category.

As stablecoin counts explode, traditional assets tokenize, and decentralized perp DEXs rise, we believe Ethena is uniquely positioned to capture these trends—transforming global leverage demand into attractive, accessible yield for users and global fintechs alike.

The protocol's strong risk management culture, tested and proven successful in real-world stress tests, has helped Ethena build deep trust and credibility among its users and partners.

Long-term, Ethena can leverage its scale, brand, and infrastructure to expand into other product areas, diversifying revenue and enhancing resilience against market shocks.

As the issuer of the fastest-growing synthetic dollar within the fastest-growing stablecoin category (yield-bearing stablecoins), Ethena is perfectly positioned to incubate new business lines that add growth to some of crypto's most profitable businesses—exchanges and on/off-ramps—while increasing the supply of USDe.

Summary

Multicoin Capital announced an investment in the ENA token of the Ethena protocol and elaborated on the core logic for their long-term bullish outlook. Ethena issues the synthetic dollar stablecoin USDe, which has become the third-largest digital dollar stablecoin and achieves over 10% annualized yield via a basis trade strategy.

Core Thesis

* Market Positioning: Ethena sits at the convergence of three major trends: stablecoins, the "perpification" of assets, and asset tokenization, establishing a leading position in the yield-bearing stablecoin sector.

* Yield Advantage: Through a delta-neutral basis trade strategy, USDe offers significantly higher yields than Treasury-backed stablecoins and exhibits a mild negative correlation with the Fed Funds Rate.

* Risk Management: The team has successfully navigated major stress tests, including the Bybit hack and the October 11th market crash, proving the protocol's risk management capabilities.

* Growth Potential: The protocol is expanding through new product lines like white-label services and third-party perpetual DEXs, with future potential benefits from emerging markets like tokenized stocks.

* Value Capture: The ENA token has a clear value accrual path. The protocol has generated approximately $450 million in annual revenue, with future value distribution planned via a "fee switch."

Development Prospects

J.P. Morgan predicts that interest-bearing stablecoins could capture 50% of the stablecoin market. Ethena, with its first-mover advantage, technical team, and risk management capabilities, is well-positioned to be a major player in this transition. The successful integration of USDe as collateral on major exchanges like Binance and Bybit provides a solid foundation for continued growth.

(Source: Multicoin Capital | Compiled by: Golden Finance)

We are proud to announce that Multicoin Capital's liquid fund has invested in the ENA token—the native token of the Ethena protocol, the issuer of USDe, the leading synthetic dollar stablecoin.

In our article "The Endgame for Stablecoins," we posited that stablecoins represent the largest potential market in crypto, and yield is the ultimate competitive frontier. While we correctly identified the direction for yield-bearing stablecoins, we underestimated the market size for synthetic dollars.

We categorize stablecoins into two types:

1. Yield-sharing stablecoins

2. Non-yield-sharing stablecoins

Yield-sharing stablecoins can be further divided into:

* Those fully backed 1:1 by government-backed treasury assets.

* Those not fully backed by treasuries, i.e., Synthetic Dollars.

Synthetic dollars are not backed solely by government-backed treasury assets but generate yield and achieve price stability by executing delta-neutral trading strategies in financial markets.

Ethena is a decentralized protocol and the operator of the largest synthetic dollar, USDe. It aims to provide an alternative to traditional stablecoins like USDC and USDT, whose reserve assets roughly earn short-term U.S. Treasury yields. USDe's reserves generate yield and target stability through basis trading—a massive and proven strategy in TradFi.

Basis trading in U.S. Treasury futures alone is a multi-hundred-billion (possibly multi-trillion) dollar market. Until now, only qualified investors and institutional buyers could access hedge funds with the infrastructure for large-scale basis trading. Crypto is fundamentally restructuring the financial system by tokenizing these opportunities for everyone.

Systemic Tailwinds for Synthetic Dollars

Ethena sits precisely at the convergence of three powerful trends reshaping modern finance: Stablecoins, Perpification, and Asset Tokenization.

Stablecoins

The total stablecoin supply exceeds $300 billion and is expected to grow to trillions by the end of the decade. USDT and USDC have dominated for nearly a decade, comprising over 80% of the supply. Neither shares yield directly with holders, but we believe yield-sharing will become the norm over time.

We see stablecoin competition and differentiation across three core dimensions: Distribution, Liquidity, and Yield.

* Tether built superior liquidity and a global distribution network for USDT.

* Circle expanded distribution by sharing economics with partners like Coinbase—a strategy that drove growth but pressured margins.

As crypto adoption accelerates, we expect more companies with vast distribution networks in finance and tech to issue their own stablecoins, further homogenizing the treasury-backed stablecoin market. For new entrants in the digital dollar space, the primary way to stand out is by offering higher yield.

Among all new entrants, Ethena is the only one achieving significant distribution and liquidity, largely due to its higher yield. Based on sUSDe's price action since launch, we estimate its annualized yield is slightly above 10%—more than double that of treasury-backed stablecoins. This is driven by its basis trade strategy, which profits from the market's leverage demand. The protocol has generated nearly $600 million in revenue, with over $450 million in the last 12 months.

We believe the true test for synthetic dollar adoption is acceptance as collateral on major exchanges. Ethena excels here, having integrated USDe as core collateral on large CEXs like Binance and Bybit—a key driver of its rapid growth.

Another unique aspect of Ethena's strategy is its mild negative correlation with the Fed Funds Rate. Unlike treasury-backed stablecoins, Ethena stands to benefit from falling rates, as lower rates stimulate economic activity, increase leverage demand, push up funding rates, and strengthen the basis trades underpinning Ethena's yield.

Finally, J.P. Morgan predicts yield-bearing stablecoins could capture up to 50% of the stablecoin market in the coming years. With the total stablecoin market poised to soar into the trillions, we believe Ethena is well-positioned to be a major player in this transition.

Perpification

Perpetual futures have achieved strong product-market fit in crypto. In the ~$4 trillion crypto asset class, perps trade over $100 billion daily, with total open interest exceeding $100 billion across CEXs and DEXs. They offer a simple way for investors to get leveraged exposure. We believe more asset classes will adopt the perpetual format—what we call "perpification."

A common question about Ethena is its potential market size, as its strategy is constrained by the open interest in perpetual markets. We agree this is a reasonable constraint near-term but believe it underestimates the medium-to-long-term opportunity.

* Perpetuals for Tokenized Stocks: The global equity market is ~$100 trillion (~25x the entire crypto market). Participants have a strong demand for leverage, evidenced by the explosion of 0DTE options. Perpetuals for tokenized stocks could directly meet this demand and are easier to understand than options for most investors. As equities tokenize, stock perps could unlock a massive new opportunity for Ethena, potentially expanding the basis trade capacity by orders of magnitude.

* New Distribution from Fintechs Integrating Decentralized Perp DEXs: As the crypto regulatory environment becomes more favorable, global fintechs should increasingly embrace crypto. Many have already integrated DeFi middleware for spot trading of long-tail assets. We believe this user base represents significant unmet leverage demand. As decentralized perp DEXs go mainstream, fintechs will naturally integrate these products, creating new distribution channels, boosting volume and open interest, and thus expanding the capacity and scalability of the basis trades backing Ethena.

Tokenization

A core strength of crypto is that anyone can issue and trade tokens seamlessly. Tokens can represent any valuable asset. The closest analogue in TradFi is the ETF. Tokenization goes far beyond ETFs—it makes holding and transacting assets faster, cheaper, and more convenient, while also improving distribution and capital efficiency. We envision a future where global fintechs become primary distributors of tokenized strategies.

Ethena initially entered the market by tokenizing the basis trade. Over time, it can diversify its yield sources. It's already doing this: when basis trade yields are low or negative, Ethena can shift some collateral to USDtb—a stablecoin backed by BlackRock's tokenized treasury fund BUIDL—to maintain stability and optimize yield.

The Bull Case for ENA

Beyond the long-term bullish logic for Ethena's potential market size, understanding the team and protocol qualities—especially regarding risk management, value capture, and future growth opportunities—is crucial.

The Team

According to our interactions, Founder and CEO Guy Young has proven to be one of the sharpest, most strategic thinkers in DeFi. He brought his experience from Cerberus Capital Management to the rapidly financializing crypto market. His success is supported by a lean but experienced team (~25 operators), including CTO Alex Nimmo (an early BitMEX employee who witnessed the rise of perps) and COO Elliot Parker (formerly of Paradigm Markets and Deribit, whose relationships underpinned key integrations). The results speak for themselves: Ethena became the largest synthetic dollar issuer in under two years, integrating with top CEXs and establishing hedging relationships many projects take years to build.

Risk Management Capabilities

Ethena is a prime example of the principle that DeFi protocols which manage risk must charge fees. The protocol has demonstrated robust risk management, successfully navigating two major stress events this year alone, each reinforcing its credibility, resilience, and brand trust.

1. The Bybit Hack (Feb 21, 2025): This real-world stress test of Ethena's exchange counterparty model saw no impact on Ethena's strategy. Hedging positions and collateral were spread across multiple platforms and secured by off-chain custodians.

2. The October 11th Flash Crash: During this extreme deleveraging event, USDe traded as low as ~$0.65 on Binance due to oracle design issues, but maintained parity on more liquid venues like Curve, and redemptions functioned normally. This indicated a platform-specific price dislocation, not a systemic de-peg.

In both events, the team communicated transparently, no user funds were lost, and the protocol operated normally, processing billions in redemptions verifiable on-chain. Successfully navigating such stress tests at scale builds trust, credibility, brand equity, and competitive moats.

Value Capture Potential

We believe Ethena has the ability to charge higher fees compared to stablecoins like USDC. Unlike USDC, Ethena actively manages market risk, generally provides users with higher yield, and is likely negatively correlated with rates in the near-to-medium term—all factors enhancing its ability to capture and sustain long-term value.

While the ENA token currently functions primarily as a governance token, we see a clear path to value accrual. Ethena generated ~$450 million in revenue last year, none of which is currently distributed to ENA holders. A "fee switch" proposal outlined milestones for value distribution, all met prior to the October 11th crash except for USDe supply, which we expect to exceed $10 billion before the switch is activated. We believe these developments will likely be viewed positively by public markets.

Long-Term Growth Potential

On its existing business alone, Ethena is already one of crypto's highest-revenue protocols. Ethena is leveraging its leadership to launch new product lines building on its core strengths:

* Ethena Whitelabel: A "Stablecoin-as-a-Service" offering for large blockchains and apps (e.g., megaETH, Jupiter, Sui via SUIG).

* HyENA and Ethereal: Two third-party perpetual DEXs built using USDe as collateral, expanding USDe's utility and bringing trading fee revenue into the Ethena ecosystem.

These potential product lines will further cement Ethena's lead in synthetic dollars and allow it to capture economic benefits from these initiatives, complementing its already strong revenue.

Why We Are Long-Term Bullish on Ethena

Ethena has carved out a unique niche within the stablecoin market long dominated by USDT and Circle, becoming the clear market leader in the synthetic dollar category.

As stablecoin counts explode, traditional assets tokenize, and decentralized perp DEXs rise, we believe Ethena is uniquely positioned to capture these trends—transforming global leverage demand into attractive, accessible yield for users and global fintechs alike.

The protocol's strong risk management culture, tested and proven successful in real-world stress tests, has helped Ethena build deep trust and credibility among its users and partners.

Long-term, Ethena can leverage its scale, brand, and infrastructure to expand into other product areas, diversifying revenue and enhancing resilience against market shocks.

As the issuer of the fastest-growing synthetic dollar within the fastest-growing stablecoin category (yield-bearing stablecoins), Ethena is perfectly positioned to incubate new business lines that add growth to some of crypto's most profitable businesses—exchanges and on/off-ramps—while increasing the supply of USDe.