Ethena Proposes ENA Buybacks as New Fee Model Could Reshape Tokenomics

Ethena is moving to overhaul the economics of its native ENA token as the protocol seeks to reduce investor selling pressure and create a stronger connection between its growing business operations and tokenholders. The proposed changes include using protocol revenue for ENA buybacks, ending monthly venture-capital unlocks and clarifying how the economic value generated by Ethena’s ecosystem is distributed.

 

The most significant element of the proposed overhaul is a fee-switch mechanism that could direct a large portion of Ethena’s net revenue toward purchasing ENA on the market. According to the proposal, once USDe circulation reaches the first milestone of $7.5 billion, 95% of net revenue from Ethena-branded businesses would be allocated to programmatic ENA purchases, while the remaining 5% would support growth initiatives.

The proposal is designed to establish a recurring source of demand for ENA rather than relying solely on market speculation. If approved and implemented, the mechanism would make the performance of Ethena’s businesses more directly relevant to the token’s economic model. However, the scale of future buybacks would depend on the protocol’s revenue and whether USDe reaches the specified supply milestones.

 

 

Ethena is also addressing concerns surrounding the release of tokens allocated to early investors. The Ethena Foundation said it purchased the remaining locked tokens from certain large seed investors that had sold ENA during the previous nine months. It also plans to accelerate the remaining original investor unlocks, effectively ending the monthly release schedule for those venture-capital holdings. Team tokens, however, will continue under their existing vesting arrangements.

This distinction is important because scheduled token unlocks can increase the amount of an asset available for sale. By removing the recurring monthly VC unlock structure, Ethena is attempting to reduce uncertainty surrounding future supply. The strategy does not eliminate all potential selling, but it could make the token’s supply dynamics easier for the market to assess.

 

Beyond buybacks and unlocks, Ethena is seeking to clarify the relationship between the protocol, its foundation and Ethena Labs. Under an agreement in principle, substantially all material intellectual property and economic upside associated with the Ethena protocol would belong to the foundation and ecosystem rather than Ethena Labs shareholders. The details of the agreement are expected to be published in October.

This proposed separation could become an important part of Ethena’s long-term token model. For ENA holders, the key question is whether the protocol’s economic activity can ultimately translate into tangible value for the broader ecosystem. The proposed arrangement attempts to create a clearer distinction between the commercial company and the decentralized protocol surrounding it.

 

The tokenomics overhaul comes at a challenging point for USDe, Ethena’s flagship synthetic-dollar product. USDe supply previously approached $15 billion during the crypto market’s stronger phase but subsequently fell below $5 billion as market conditions changed. One factor affecting USDe’s economics has been the decline in derivatives funding rates, which are an important component of the yield strategy behind the product.

Ethena has been pursuing additional avenues for growth as a result. The protocol recently announced a $1 billion facility with FalconX that can use USDe backing in overcollateralized institutional lending. It has also pursued relationships with established financial institutions, including Janus Henderson and Coinbase, as it attempts to expand USDe’s distribution and utility.

 

The announcement immediately changed market sentiment around ENA. CoinDesk reported that the token gained roughly 23% over 24 hours following the announcement, extending a sharp rally that had already pushed ENA to roughly double its price in a little more than a week.

The move illustrates how strongly tokenomics can influence cryptocurrency valuations. Investors are not simply assessing Ethena’s current business activity; they are also evaluating whether the proposed structure can create sustained demand for ENA while limiting predictable sources of additional supply.

Still, the proposal does not guarantee continued price appreciation. The buyback mechanism depends on future revenue, USDe growth and the implementation of the governance decision. The broader crypto market will also remain an important influence on ENA’s performance.

 

Ethena’s proposed tokenomics overhaul represents a significant attempt to change how ENA interacts with the protocol’s underlying economy. A potential revenue-funded buyback program, changes to investor unlocks and a clearer allocation of protocol economics could give ENA a stronger connection to Ethena’s business activity.

The immediate market reaction suggests that traders view the changes positively, but the longer-term outcome will depend on execution. For the strategy to have a lasting impact, Ethena will need to rebuild USDe’s supply, expand revenue-generating activities and successfully implement the proposed fee mechanism. If those conditions are met, the overhaul could mark an important transition for ENA from a governance-focused token toward an asset with a more clearly defined economic role within the Ethena ecosystem.