Ethena (ENA) Tokenomika

ENA Token Information and Allocation

The Ethena protocol's governance token, ENA, is an ERC-20 token deployed on Ethereum with a Total Supply of 15,000,000,000 ENA. The token distribution is structured across five main categories:

The Ecosystem Development and Airdrops allocation is intended for various initiatives, including incentive campaigns. For instance, the first season of the Shard Campaign airdropped 5% of the total ENA supply (750 million ENA) to participants.

Issuance and Inflation Mechanism

The ENA token utilizes a dynamic issuance/burn mechanism. While the initial total supply is 15 billion ENA, the token contract includes a controlled inflation mechanism.

The project team, which controls a four-of-eight multi-sig serving as the "owner" of the ENA contract, has the ability to mint additional ENA tokens via a "mint" function. This function is subject to strict limitations:

• Maximum Inflation: The function can mint up to 10.00% of the total token supply.
• Minting Frequency: It can only be called once every 365 days.
• Initial Lock: The initial minting of ENA counted as a call, meaning additional tokens cannot be minted until at least April 2, 2025.

Usage and Incentive Mechanism

ENA's primary utility is for governance of the Ethena protocol. ENA tokenholders are planned to be able to vote on proposals concerning critical aspects of the protocol's operation, including:

• General risk management frameworks
• Composition of the USDe collateral backing
• Exposure to exchanges and custodians
• Decentralized Exchange (DEX) and cross-chain integrations
• New product prioritization and community grants
• Sizing and composition of the Reserve Fund
• Distribution allocation between sUSDe tokenholders and the Reserve Fund

As of April 2024, ENA had no live functions, but a tokenholder-based governance process is planned for the future.

Incentive Campaigns (Shards and Sats)

Ethena uses incentive campaigns to drive adoption and liquidity for its synthetic dollar, USDe.

• Shard Campaign (Past): This campaign concluded on April 1, 2024, rewarding users with "Shards" for activities such as holding, locking, staking USDe, and providing USDe liquidity. The first airdrop of ENA was distributed based on these Shards.
• Sats Campaign (Current/Future): Launched on April 2, 2024, this campaign allows users to earn "Sats" through similar actions (holding, locking, staking USDe, providing liquidity) and through campaigns with partner protocols like Pendle, Gearbox, and Mantle. The Sats Campaign is set to conclude in the earlier of either five months (September 2, 2024) or when USDe's supply reaches 5 billion.

Locking and Unlocking Mechanisms

The ENA token allocation for Core Contributors and Investors is subject to a strict vesting schedule designed to ensure long-term alignment with the protocol's success.

ENA Vesting Schedule

Both Core Contributors (30%) and Investors (25%) are subject to the same vesting terms:

• Lock-up Period: A 1-year cliff from the token launch date.
• Vesting: After the 1-year cliff, tokens vest linearly over 3 years on a monthly basis.
• Cliff Unlock: At the 1-year cliff, 25% of the total allocated tokens for these groups will unlock.

USDe/sUSDe Unlocking

For users holding the staked version of the synthetic dollar, sUSDe, or USDe lockers, there is a mechanism for withdrawal:

• Unlocking Process: sUSDe tokenholders or USDe lockers can initiate an unstaking/unlocking process at any time.
• Cooldown Period: This process takes seven days to conclude, after which the user can withdraw the underlying USDe. The DEFAULT_ADMIN_ROLE of the Ethena Staking contract can set this cooldown duration up to a maximum of 90 days.

ENA Token Unlock Schedule

The vesting schedule for ENA tokens results in significant monthly unlocks for the Core Contributors and Investors starting after the initial 1-year cliff. The following table details the largest upcoming monthly unlocks, showing the amount of ENA released and its impact on the circulating supply:

These monthly unlocks, which represent a substantial portion of the circulating supply, are part of the linear vesting schedule for the Core Contributor and Investor allocations.