โทเคโนมิกส์ Ethena (ENA)

The Ethena protocol utilizes a two-token system: ENA as the governance token and USDe as the synthetic dollar stablecoin. The token economics of ENA are structured around a fixed total supply, a specific allocation mechanism, and a multi-year vesting schedule designed to align the interests of the core team and investors with the long-term success of the protocol.

Issuance Mechanism and Total Supply

The ENA token is an ERC-20 asset deployed on Ethereum with a Total Supply of 15,000,000,000 ENA.

The issuance mechanism is described as a Dynamic Mechanism. While the initial total supply is fixed, the ENA token contract includes a restricted "mint" function. This function allows the address with the "owner" role (controlled by a four-of-eight multi-sig held by the project team) to mint additional ENA tokens, subject to constraints:

• 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 Minting: The initial minting of ENA counted as a call, meaning additional tokens cannot be minted until at least April 2, 2025.

Allocation Mechanism

The total supply of 15 billion ENA is distributed across five main categories, with a significant portion allocated to the team and investors, subject to vesting schedules, and a large portion dedicated to ecosystem development and airdrops.

The Ecosystem Development and Airdrops allocation is further detailed:

• The first season of the Shard Campaign airdropped 5.00% of the total ENA supply (750 million ENA) to participants on April 2, 2024.
• The total allocation for the first and second seasons of the Rewards Campaigns is 10% of the total ENA supply.
• The remainder of the Ecosystem allocation is intended for various Ethena initiatives, cross-chain efforts, and exchange partnerships, and will be held by a DAO-controlled multi-sig.

Locking Mechanism and Unlocking Schedule

The ENA token employs a strict vesting schedule for the Core Contributors and Investors allocations, designed to ensure long-term commitment.

Vesting Schedule Details

Both the Core Contributors (Team) and Investors allocations are subject to the same vesting terms:

• Lock-up Period: A 1-year cliff from the token launch date. No tokens from these allocations are unlocked before this cliff.
• Vesting: After the 1-year cliff, 25% of the allocation unlocks immediately. The remaining tokens vest linearly on a monthly basis over the subsequent 3 years.

ENA Token Unlock Events

The vesting schedule results in significant token unlocks occurring monthly, starting after the 1-year cliff in April 2025. The data below shows the projected monthly unlock events for Ethena (ENA) through early 2028:

Note: The large unlock on March 6, 2025, represents the 1-year cliff unlock for the Team and Investor allocations, totaling over 2.22 billion ENA.

Vesting for Airdrop Participants

A portion of the ENA airdropped to participants in the Shard Campaign was also subject to vesting:

• Wallet addresses in the top 2,000 of the Shard Campaign leaderboard were subject to a six-month linear vesting period for half of their ENA airdrop claims.

Usage and Incentive Mechanism

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

• General risk management frameworks.
• Composition of the USDe collateral (e.g., which assets are used).
• Exposure to exchanges and custodians.
• Integrations with decentralized exchanges (DEXs) and cross-chain initiatives.
• Sizing and composition of the Reserve Fund.
• Distribution allocation of yield between the staked USDe tokenholders (sUSDe) and the Reserve Fund.

However, as of April 4, 2024, ENA had no live governance functions, and the project team retained control over smart contract development and implementation.

Incentive Campaigns (Shards and Sats)

Ethena uses incentive campaigns to drive adoption and growth of its synthetic dollar, USDe.

1. Shard Campaign (Past): This campaign concluded on April 1, 2024, and rewarded users with "Shards" for various activities, which were later redeemed for ENA tokens (5.00% of total supply). Activities that earned Shards included:

   • Holding USDe.
   • Locking USDe.
   • Staking USDe (to receive sUSDe).
   • Providing USDe liquidity on external protocols like Curve and Uniswap.
   • Higher-risk activities like locking LP tokens or holding Pendle Yield Tokens (YTs) received significantly higher "shard boosts."

2. Sats Campaign (Live/Future): This campaign, which began on April 2, 2024, replaced the Shard Campaign and allows users to earn "Sats" through similar actions (holding, locking, staking USDe, and providing liquidity). The Sats Campaign is set to conclude on the earlier of September 2, 2024, or when USDe's supply reaches 5.00 billion.

Staked ENA (sENA)

ENA can be locked to receive sENA, which serves as a liquid receipt token composable across DeFi applications. sENA is structured to accrue value, initially receiving unclaimed ENA from the Season 2 airdrop distribution. Furthermore, staked ENA is being incorporated into generalized restaking pools in partnership with Symbiotic to provide economic security for cross-chain transfers of USDe. sENA holders are also set to receive a portion of future token supplies from ecosystem applications, such as 15% of any potential future token supply from Ethereal and 5% of the DRV token supply from Derive DAO.

USDe (Synthetic Dollar) Mechanism

While ENA is the governance token, the core product of Ethena is USDe, a synthetic dollar that aims to maintain a 1:1 peg to the USD while generating yield.

• Collateralization and Peg Stability: USDe is collateralized by spot crypto assets (e.g., BTC, ETH, SOL, stETH, and stablecoins like USDT, USDC) and synthetically maintains its peg through delta-neutral derivative positions. When a whitelisted user deposits collateral (e.g., stETH) to mint USDe, Ethena simultaneously opens a 1x perpetual short position on a centralized exchange (CEX) to hedge against the price volatility of the underlying collateral.
• Yield Generation: The yield for USDe stakers (who hold sUSDe) is derived from two sources: (1) the yield from the underlying staked ETH collateral, and (2) the funding rate interest revenue generated from the short perpetual positions.
• Unlocking USDe: Staked USDe (sUSDe) tokenholders or USDe lockers can initiate an unstaking/unlocking process at any time, which requires a seven-day cooldown period before the underlying USDe can be withdrawn.