The Ethena Foundation announced four major updates that could significantly alter the token economy and the governance structure of the Ethena ecosystem. These measures include the buyback of locked tokens from some of the initial large investors who sold ENA over the past nine months, the implementation of a “fee switch” mechanism that will use protocol revenue to buy back ENA, and the mitigation of potential selling pressure stemming from future unlocks of venture capital tokens.
According to the foundation’s statement, the Ethena Foundation has acquired all of the tokens that were locked and held by certain large investors who conducted ENA sales of any amount during the last nine months. This measure aims to eliminate any potential selling pressure that could arise from future token issuances by these investors.
Another major development in the Ethena ecosystem was the Master Framework Agreement signed between the Ethena Foundation and Ethena Labs. Under this agreement, ownership of intellectual property rights and the economic value generated by the protocol are transferred entirely to the Ethena Foundation.
In the new structure, this value will be managed by the holders of the ENA token. It has been declared that the shareholders of Ethereum Labs will not have perpetual rights over the cash flows generated by the protocol. Therefore, the goal is to link the protocol’s economic value more directly to token holders, rather than to the company’s shareholders.
The Ethena Foundation also announced that the governance proposal for the much-anticipated “fee swap” mechanism has been opened for voting.
If the proposal is approved, the net revenues from all lines of business operating under the Ethena brand will be used for the programmatic purchase of ENA tokens. In this way, it is expected that the protocol’s revenues will be directed directly to the buyback of ENA tokens in the market.
This mechanism stands out as a significant change that could ensure that the income generated as the Ethena ecosystem grows is reinvested into the ENA token economy.
The Ethereum Foundation and the project’s major investors have also agreed on a new structure to mitigate potential future selling pressure that could be generated by the monthly unlocks of venture capital tokens.
Accordingly, the goal is to remove any pressure on supply that may arise from the usual venture capital lockups, freeing the ungenerated tokens that belong to the investors.
This does not constitute investment advice.
