Ethena Eyes $120T Equity Market for Higher Funding Yields

Ethena announced on Aug. 28 that it will expand the USDe basis strategy into equity perpetual futures after open interest in those contracts rose to about $6.2 billion from under $1 billion in March. The firm plans to deploy positions in the coming weeks using the same infrastructure and trading venues it uses for crypto perpetuals.

Funding on equity perpetuals has been substantially higher than on Bitcoin perpetuals in recent months. Funding rates averaged roughly 14% on Hyperliquid and about 17.5% on Binance, compared with Bitcoin perpetual funding that averaged 2.2% this year through Aug. 11, down from 4.9% in 2025 and 11% in 2024.

Guy Young, Ethena’s founder, described equity- and commodity-linked perpetuals as among the protocol’s largest potential growth markets. He reported that real-world-asset perpetual volume exceeded half of crypto volume on Hyperliquid last month and that aggregate RWA perpetual volume on Binance was roughly twice the volume of BTC‑USDT. Young expects open interest and trading volume in that sector to surpass crypto perpetuals across major venues within about two years.

Ethena said the push into equity perpetuals responds to a deterioration in the crypto basis trade that originally backed USDe. USDe launched on a delta-neutral structure that paired crypto collateral with short derivatives positions and collected positive funding when leveraged long traders paid it. Falling demand for crypto leverage has reduced those returns: crypto basis positions account for about 13% of USDe’s backing, according to Ethena’s transparency board.

To replace lost yield, Ethena increased allocations to DeFi lending, liquid stablecoins, real-world assets and institutional lending. The transparency board shows DeFi lending at about $1.26 billion (30.8% of reserves), liquid stablecoins at roughly 32%, real-world assets at 12.3% and institutional lending at 11.8%. Those allocations generate yields reported in the range of roughly 3.1% to as high as 7%.

A governance proposal unveiled Aug. 27 links ENA token buybacks to a recovery in USDe supply. The proposal would begin directing revenue to ENA purchases once USDe reaches $7.5 billion in circulation, with larger revenue shares unlocked at $10 billion, $15 billion and $20 billion. If the first milestone is reached, Ethena proposes routing 95% of the net revenue paid to its Foundation from its three core business lines to ENA buybacks. USDe was around $4.04 billion at the time of the announcement, meaning the stablecoin needs roughly $3.46 billion more to trigger the initial buyback program. Ethena’s backtest estimated buybacks could total about $52.7 million annually under historical conditions, subject to future revenue and yields.

Ethena noted risks to the equity-basis strategy, including the potential for funding rates to compress as more capital enters the short side and for liquidity to thin during market stress. Equity perpetuals trade continuously on crypto venues when underlying stock markets are closed, which raises questions about pricing and liquidity outside regular hours.

Market reaction to Ethena’s announcements included a sharp move in ENA trading. The token changed hands around $0.163 on Aug. 28, up about 11.6% over 24 hours and nearly 99% over 30 days, with trading volume above $2 billion. Ethena plans to begin allocating capital to equity-basis positions in the coming weeks, subject to liquidity and market conditions.