Ethena Ends VC Unlocks and Turns On Fee Switch for ENA

Ethena is buying back the remaining seed locks and ending monthly VC unlocks, while ENA holders vote on a fee switch that would direct protocol revenue into token buybacks.

Key Takeaways

• Ethena bought back the remaining locked tokens from seed investors and is ending the monthly release of VC tokens.
• ENA rose 23% in 24 hours to $0.17, and has more than doubled in just over a week.
• Holders are voting on a fee switch that would use 95% of net revenue for ENA purchases once USDe reaches $7.5 billion.

Ethena announced a major change on Thursday to the economics of ENA, the native token of the protocol behind the synthetic dollar USDe. ENA’s price jumped after the announcement and was up 23% in 24 hours at $0.17 (€0.15). In a little over a week, the token has more than doubled, while the broader crypto rally kept gaining steam.

Less Selling Pressure

The Ethena Foundation says it has bought the remaining locked tokens from several large seed investors. It is also speeding up the final part of the original unlocks, which will stop the monthly release of VC tokens. The team tokens will still remain under their existing vesting schedule.

That matters for ENA because the token has long been weighed down by ongoing selling pressure from early investors. Based on the available tokenomics, ENA has a total supply of 15 billion tokens, with about 9.03 billion currently in circulation. The remaining tokens are still vesting through 2028, which could still add more supply.

Fee Switch Should Create Demand

At the same time, ENA holders are voting on a fee switch that should create a recurring source of demand for the token. Once USDe reaches an initial threshold of $7.5 billion (€6.4 billion), 95% of net revenue from Ethena brands would be used for programmatic ENA purchases. The other 5% would go to growth.

The move should also make it clearer where the protocol’s economic value ends up. Ethena wants to place most of the economic upside and key intellectual property with the foundation and the ecosystem, instead of Ethena Labs shareholders. The agreement on that is expected to be published in October.

Why This Matters for Europe

For European crypto investors, Ethena is interesting because USDe is one of the best-known synthetic dollars in DeFi. The coin is backed by a delta-neutral strategy, where staked ETH and short positions in perpetual futures hedge each other to keep the value stable. If the fee switch is activated, ENA would also shift from being a pure governance token to a token with a direct claim on protocol revenue, which could change how the market views the token structure.

The announcement comes after USDe fell back below $5 billion (€4.3 billion) in supply, after peaking at nearly $15 billion (€12.9 billion) in October during the bull market. Ethena has therefore been looking for new growth sources for some time. Last week, the protocol also announced a $1 billion facility with FalconX, and earlier this year Janus Henderson invested in ENA while Coinbase launched a savings product with Ethena.