Lending accounts for 51.2% of Ethena USDe backing

Lending represented 51.2% of Ethena’s $4.76 billion in USDe backing in LlamaRisk’s Oct. 12 assessment. DeFi lending accounted for 36.9% and institutional loans for 14.3%. The figures describe reserve allocation, not borrower drawdowns or assets available for immediate withdrawal or redemption.

The assessment recorded $4.76 billion of backing against 4.76 billion USDe outstanding. Liquid stablecoins made up 24.9% of backing, crypto basis positions 17.6% and real-world assets 6%.

Ethena’s DeFi lending policy covers markets with excess collateral, conservative loan-to-value limits and exposure restrictions. Governance and the protocol’s Risk Committee review the markets and limits. Assets supplied to Aave can be withdrawn only when enough unborrowed liquidity remains in the relevant pool. Morpho markets also require sufficient liquidity for withdrawals.

Institutional lending consists of stable-asset loans backed by collateral worth more than the amount borrowed. Ethena’s policy allows collateral such as liquid Bitcoin and Ether, qualified custodians and triparty arrangements in which an independent agent holds and administers the collateral. The Risk Committee oversees counterparty eligibility and aggregate exposure limits.

Collateral supports the lender’s claim but does not set the date when lent assets can be returned. Recovery depends on the recall and redelivery terms in each agreement. LlamaRisk’s review framework covers collateral ratios, separate custody, enforceable security interests, liquidation rights, recall notices and delivery periods.

The allocation affects how USDe holders can exit their positions. Direct redemption is limited to eligible Mint Users who have completed know-your-customer and anti-money-laundering checks, other onboarding requirements and whitelisting. Other holders must sell USDe on secondary markets or first qualify for direct redemption.

Ethena’s terms allow eligible users to receive supported digital assets representing a pro rata share of reserves, capped at $1 in notional value per USDe and subject to fees and other conditions. LlamaRisk reported a 20 million USDe redemption ceiling per block, compared with 200 million for minting. The limits are transaction ceilings, not measures of cash or other assets immediately available for settlement.

Receiving a backing asset does not mean receiving dollars in a bank account. Redemption orders use signed prices and operational acceptance checks. The enabled stablecoins listed in LlamaRisk’s Oct. 12 assessment included PYUSD, USDC, USDG, USDT, USDm and USDtb, with DAI subject to smaller limits.

USDe held in Ethena’s sUSDe staking vault requires a separate withdrawal process. sUSDe is an ERC-4626 vault share whose value is measured in USDe per share. Holders must complete a governance-set cooldown of between one and seven days before receiving USDe. The active cooldown on Oct. 12 was not specified in the published guidance. Selling or redeeming that USDe requires a further transaction.

Ethena’s reserve fund is intended to cover negative protocol revenue and backing shortfalls. LlamaRisk’s September assessment placed the fund at about $62.1 million. The fund is separate from assets that can be withdrawn or delivered immediately.

LlamaRisk disclosed partial funding from Aave DAO and its role in an independent proof-of-reserves attestation for Ethena. It reported receiving no compensation from Ethena or related entities for the assessment.