Ethena buyback plan lifts ENA 27% as DeFi returns value to holders

ENA gained 27% in two days after Ethena proposed allocating 95% of net protocol revenue to token buybacks once USDe supply crosses $7.5 billion. The token traded near $0.16 as of Sept. 2, up roughly 68% over 30 days, with daily volume reaching about $595 million, CoinGecko data shows.

The proposal, filed Aug. 27 on Snapshot governance and closing Sept. 2, would dedicate 5% of net protocol revenue to programmatic ENA purchases at the $7.5 billion USDe threshold, scaling to 20% once supply reaches $20 billion. Market analyst LAR (@LAR7Crypto) said ENA's Double Bottom pattern breaking above resistance supports a medium-term target of $0.30, with an extended objective of $1.50.

The buyback mechanism is one prong of a broader tokenomics overhaul. The Ethena Foundation bought out early investors who had been consistently selling unlocked tokens, eliminating the monthly sell pressure that dragged ENA from a late-2024 peak near $1.40 to roughly $0.09 by August 2026. Investors who sold after the October 2025 peak now hold no unvested ENA that could be sold into the market, according to CoinDesk. All remaining investor tokens now unlock on a single date — Oct. 5, 2026 — with about 12% of total supply still locked across team, ecosystem, and Foundation allocations.

The vote closes Sept. 2. If it passes, the next milestone is USDe reaching $7.5 billion in supply — a level the synthetic dollar last held before the broader crypto downturn compressed it from a September 2025 peak of roughly $15 billion to under $5 billion. The Oct. 5 single-date unlock of remaining investor tokens will test whether the buyout strategy holds.

USDe Supply Is the Gatekeeper

USDe currently holds a circulating supply near $4 billion, ranking as the sixth-largest stablecoin with a market cap of about $4.1 billion. The $7.5 billion buyback threshold is deliberately set above current levels, requiring the protocol to demonstrate sustained growth before buybacks begin. Premature buybacks would drain the treasury; conditional buybacks align incentives.

Recent institutional partnerships could accelerate supply growth toward the trigger. FalconX launched a $1 billion lending facility for USDe, Janus Henderson invested in Ethena in June and is exploring distribution, and Coinbase launched a savings product featuring the synthetic dollar. Each dollar of USDe growth moves the protocol closer to activating buybacks.

The Foundation is also formalizing an agreement with Ethena Labs that assigns "substantially all material IP and economic upside" to the Foundation and ecosystem rather than Labs equity holders, a restructuring expected to be published in October. The move addresses a structural tension common in DeFi, where a for-profit labs entity builds the software while a separate foundation governs the protocol — often leaving tokenholders exposed to misaligned incentives.

ENA's rally also reflects a broader sector shift. Crypto projects have begun returning real revenue to tokenholders through buybacks and supply cuts, mirroring how public companies repurchase stock. Ethena's proposal is among the most direct links between protocol revenue and token value in the sector, and its execution could set a precedent for other DeFi protocols weighing similar structures.

Persistent negative funding rates in derivatives markets remain a risk to USDe revenue generation and, by extension, the buyback program's viability. USDe relies on delta-neutral hedging strategies that capture funding rate differentials between spot and futures markets — if those rates turn negative for extended periods, protocol revenue drops and the $7.5 billion threshold becomes harder to reach.

This article is for informational purposes only and does not constitute investment advice.