STANDARD CHARTERED SETS ENA TARGET OF 2 USD: WHERE DOES THE SOURCE COME FROM?
On September 30, Standard Chartered set a target that $ENA would reach 2 USD by the end of 2028, based on forecasts that the scale of USDe will grow from around 4.9 billion USD to 40 billion USD. The key thesis is that USDe growth will generate additional revenue to buy back ENA.
1. Does USDe growth translate into buying power for ENA?
- The size of USDe is the amount of assets that need to be used as collateral, not Ethena’s revenue. The buyback cash flow also depends on the yield of the assets, costs, and the portion of revenue allocated to the token. Even if USDe grows, if the yield falls, ENA buying power may not increase correspondingly.
2. Buybacks don’t happen automatically
- The fee switch mechanism has a first threshold at 7.5 billion USD of USDe, higher than the 4.9 billion USD figure cited in the report. The 95% earmarked for buybacks applies to the portion of net revenues transferred to the Foundation under the mechanism, not to 95% of all protocol yield. You need to distinguish whether the mechanism is triggered from the actual amount of purchases that have already occurred.
3. Buybacks also come with trade-offs
- Ethena generates part of its yield from collateral assets combined with a hedged derivatives position, but funding can decline or even turn negative. Extracting additional revenue for buybacks can also reduce the portion of yield distributed to depositors and reward programs. If the product becomes less attractive, the growth rate of USDe may slow down, which would indirectly affect the source of funds used to buy ENA.
On September 30, Standard Chartered set a target that $ENA would reach 2 USD by the end of 2028, based on forecasts that the scale of USDe will grow from around 4.9 billion USD to 40 billion USD. The key thesis is that USDe growth will generate additional revenue to buy back ENA.
1. Does USDe growth translate into buying power for ENA?
- The size of USDe is the amount of assets that need to be used as collateral, not Ethena’s revenue. The buyback cash flow also depends on the yield of the assets, costs, and the portion of revenue allocated to the token. Even if USDe grows, if the yield falls, ENA buying power may not increase correspondingly.
2. Buybacks don’t happen automatically
- The fee switch mechanism has a first threshold at 7.5 billion USD of USDe, higher than the 4.9 billion USD figure cited in the report. The 95% earmarked for buybacks applies to the portion of net revenues transferred to the Foundation under the mechanism, not to 95% of all protocol yield. You need to distinguish whether the mechanism is triggered from the actual amount of purchases that have already occurred.
3. Buybacks also come with trade-offs
- Ethena generates part of its yield from collateral assets combined with a hedged derivatives position, but funding can decline or even turn negative. Extracting additional revenue for buybacks can also reduce the portion of yield distributed to depositors and reward programs. If the product becomes less attractive, the growth rate of USDe may slow down, which would indirectly affect the source of funds used to buy ENA.
