Fee switch: the bull market "stimulant" that sent ENA token price soaring
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Fee switch: the bull market "stimulant" that sent ENA token price soaring
Based on Ethena's current yield levels, holders can achieve a highly competitive return rate.
Navigating Web3 tides with focused insightsAuthor: Jonaso
Translation: Tim, PANews
Recently we've all witnessed ENA's surge, not only skyrocketing in price but also capturing massive attention at an astonishing pace.
But most people haven't realized: the main catalyst has yet to arrive—the fee switch.
The Rise of a New Stablecoin Giant
In less than a year, USDe supply has grown from zero to over $6 billion, surpassing DAI to become the third-largest decentralized stablecoin, behind only USDT and USDC.
The annualized yield for sUSDe has reached 10%, making it the highest sustainable return currently available in crypto. This surge in yields is driving aggressive loop arbitrage strategies on Aave and other decentralized platforms.
Financing rates continue to climb, with Bitcoin currently at 19% and Ethereum at 12%. This marks the first time in six months that both have simultaneously exceeded the 11% threshold.
Ethena's weekly revenue reached $7.8 million, translating to an annualized projection exceeding $400 million. Even conservatively estimated, there remains room for growth. Ethena has already allocated 41% of its stablecoin reserves into higher-yielding perpetual contract strategies, while average market funding rates have hit 14%.
The higher annualized yield now satisfies a key condition for activating the ENA fee switch: sUSDe returns must exceed Sky's current savings rate (now 4.5%) by at least 5%. This milestone has now been confirmed.
Macro Perspective: Fed Rate Cuts and Ethena’s Stablecoin Strategy
Ethena’s business model thrives on market volatility and high perpetual contract funding rates.
Unlike traditional stablecoins such as USDC or USDT, which rely on Treasury yields, Ethena generates returns through its neutral hedging strategy: going long on spot while shorting perpetual contracts.
When funding rates are high, Ethena earns more. For this reason, many anticipate that if the Federal Reserve begins cutting rates as expected by late 2025, Ethena will benefit even more.
In fact, following the most recent rate cut in December 2024, Ethena achieved a record monthly revenue of $12 million.
Ecosystem Growth and Strong Metrics
Ethena has rapidly emerged as one of the top DeFi protocols by TVL, now surpassing $6 billion in total value locked and generating nearly $400 million in revenue—placing it among the most profitable DeFi projects today.
Three flagship products are driving Ethena's ecosystem expansion:
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Ethereal: A decentralized perpetuals exchange with approximately $712 million in TVL.
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Terminal: A liquidity hub focused on tokenized assets, currently with nearly $129 million in TVL.
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Strata: Structured yield products with $13 million in TVL.
Meanwhile, Ethena is expanding across multiple chains.
On Bybit, USDe trading volume has surpassed USDC ($540 million vs $444 million).
On the TON network, stablecoin USDe has reached $87 million in TVL within just six weeks.
Institutional Capital and Token Buybacks
Recently, Ethena announced a partnership with asset management firm StablecoinX, which plans to list USDE as a stock ticker on the Nasdaq exchange.
This fundraising round attracted major crypto VCs including Pantera, Dragonfly, and Wintermute, raising $360 million.
Of this, $260 million will be used over the next six weeks to repurchase ENA tokens from the open market—absorbing nearly 8% of the circulating supply.
StablecoinX will permanently hold ENA on its balance sheet, aiming to reduce market float and support the protocol’s long-term development.
The Fee Switch: The Real Catalyst
While all the above factors have driven ENA’s rise, the real catalyst is still pending: the fee switch.
Despite strong performance, ENA and sENA currently lack a direct mechanism to capture this value.
To address this, the Wintermute governance team has submitted a proposal to activate the fee switch, enabling token holders to share in protocol revenues.
This mechanism would allow sENA holders to receive a portion of protocol income, creating tangible value and elevating ENA beyond a mere governance token.
To activate the fee switch, Ethena must meet five conditions. As of July 2025, four have already been met:
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USDe supply exceeds $6 billion
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Cumulative revenue exceeds $250 million
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Reserve fund holding 1% of total supply
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Yield spread ≥ 5%
The only remaining requirement is listing USDe on either Binance or OKX (the token is already listed on Bybit, MEXC, and Bitget).
Once this final step is completed, the fee switch can be activated, allowing sENA holders to begin receiving a share of Ethena’s project earnings.
Given Ethena’s current revenue levels, token holders stand to earn highly competitive yields.
Conclusion
Once the fee switch is turned on, ENA will take off.
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