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Ethena Token Soars on Proposal to Buy Back ENA and Overhaul VC Unlocks

Protocol seeks to reduce selling pressure and boost token value as it aims to revive growth of USDe stablecoin

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By LineZotpaper
Published
Read Time2 min
Ethena’s governance token ENA surged on Thursday after the foundation proposed a buyback program and changes to venture capital unlock schedules, aiming to channel protocol revenue to token holders and curb investor selling pressure in a bid to revive growth of its USDe stablecoin.

The Ethena Foundation has unveiled a governance proposal that would use a portion of protocol revenue to buy back ENA tokens from the open market, while also overhauling the vesting and unlock schedule for early venture investors. The move sent ENA prices up by more than 20% in intraday trading, according to CoinDesk data.

Ethena is the issuer of USDe, a synthetic dollar stablecoin that generates yield through delta-hedged positions in ether and bitcoin. USDe’s supply grew rapidly in early 2024, peaking at over $3.4 billion, but has since declined as competition from rival stablecoins and fluctuating yields caused holders to rotate out. The ENA token, used for governance and staking, had also faced persistent selling pressure as early backers unlocked their positions.

The proposed changes aim to address both issues. Under the plan, the protocol would allocate a portion of its revenue—derived from staking, funding rates and other activities—to a buyback program that purchases and potentially burns ENA. Separately, VC unlock schedules would be extended and staggered to prevent large dumps. The foundation argues this will better align long-term incentives and make the token more attractive to holders.

“By redirecting protocol value back to the token and reducing predictable sell pressure from unlocks, we hope to create a more sustainable ecosystem for USDe and its stakeholders,” the foundation said in the proposal text.

Critics, however, caution that buybacks can mask underlying structural problems and may not address the core challenge of growing USDe demand. Some also point out that altering unlock schedules after the fact raises questions about contractual commitments and could deter future venture investment. The proposal is currently open for community discussion, with a formal vote expected in the coming days.

The broader stablecoin market remains highly competitive, with the likes of USDC and DAI maintaining dominant positions, while newer entrants like PayPal’s PYUSD also vie for share. Ethena’s ability to revive USDe growth will depend not only on tokenomics but also on the attractiveness of its yield and the perceived safety of its synthetic design.

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Analysis

Why This Matters

  • ENA holders could benefit from reduced supply and direct revenue sharing, potentially boosting token price and staking yields.
  • The success of the buyback and unlock overhaul may determine whether USDe can regain its growth trajectory, which would impact the broader DeFi stablecoin ecosystem.
  • The proposal sets a precedent for how crypto protocols handle token dilution and investor tensions, with implications for governance and VC relationships.

Background

Ethena launched in early 2024 with USDe, a synthetic dollar that uses delta hedging to maintain its peg while generating yield. The stablecoin quickly attracted billions in TVL, fueled by hype and high funding rates. However, as crypto market conditions shifted, USDe’s supply fell, and ENA’s price suffered from ongoing unlocks by early investors who had received tokens at low valuations. The foundation now hopes to reverse both trends through a combination of buybacks and unlock restructuring—a strategy previously attempted by other DeFi projects with mixed results.

Key Perspectives

Ethena Foundation: Argues the proposals are necessary to align incentives, reduce dilution, and channel protocol revenue back to tokenholders, which will in turn support USDe growth. Venture Capital Backers: Likely to support the extension of unlock schedules if it stabilizes the token price and maintains goodwill with the community, though some may resist changes that delay their exit. Critics and Skeptics: Warn that buybacks can be a short-term price boost that distracts from fundamental issues like declining USDe demand. They also question the legality and fairness of retroactively altering VC unlock terms, which could harm Ethena’s reputation with future investors.

What to Watch

  • The outcome of the governance vote and the final details of the buyback mechanism (e.g., frequency, amount, whether tokens are burned).
  • USDe supply numbers over the next month—a sustained increase would signal revived confidence.
  • ENA price action and trading volume around unlock dates to see if selling pressure actually diminishes.

Sources

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Articles published under the Zotpaper byline are synthesized from multiple source publications by our AI editor and reviewed by our editorial process. Each story combines reporting from credible outlets to give readers a balanced, comprehensive view.

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