The Ethena Foundation has initiated a vote on a radical change to the protocol's economics: it proposes directing nearly 100% of the ecosystem's net profit toward a programmatic buyback of the governance token ENA. This is a step that could fundamentally reshape the approach to value distribution in decentralized finance, and I have carefully examined the details of the initiative.
Fee Switching: From Yields to Buybacks
The essence of the proposal is a "fee switch." Instead of distributing revenues among sUSDe holders, partner programs, and other directions, all net proceeds from Ethena's products will go toward purchasing ENA on the open market. This is a classic buyback mechanism, which in traditional finance often signals a company's confidence in its own shares, but it remains rare in the crypto sector. The vote has already been approved by the Risk Committee and launched on Snapshot, although exact timelines and guarantees of adoption have not yet been announced.
Restructuring Rights to Protocol Value
In parallel, Ethena Labs and the Ethena Foundation have signed a framework agreement under which all intellectual property and rights to the value generated by the protocol transfer exclusively to the foundation. In essence, this is a consolidation of control: ENA holders, through governance, will manage these assets, while Ethena Labs investors lose residual rights to cash flows. This is a bold move that could strengthen the position of tokenholders, but it also creates a risk of centralized management.
Reducing Future Price Pressure
A key part of the update concerns tokenomics. The foundation and major venture investors have agreed to cancel future monthly token unlocks, which accounted for 25% of ENA's fixed supply (3.75 billion coins). Previously, these assets were subject to a one-year cliff and a three-year vesting period. Now, the unlocked tokens of investors who agreed to the new terms are removed from the schedule. Moreover, the foundation has already bought back the remaining locked ENA from a number of early investors who had been selling assets over the past nine months, although the details of the deal are not disclosed.
The market reacted positively: over the past day, the price of ENA rose nearly 12% to $0.16, although in April 2024, at its peak, the asset traded at $1.5. The current market capitalization is $1.54 billion, and Ethena's TVL stands at $4.5 billion, of which about $4 billion is attributed to USDe.
It is important to note that in August 2025, USDe entered the top three largest stablecoins, but within three months its supply shrank by more than 50% due to falling yields. This shows how fragile an ecosystem dependent on interest rates can be.
My analysis: Ethena's initiative is an attempt to kill two birds with one stone: create sustainable demand for ENA through buybacks and eliminate the risk of a price crash from future unlocks. However, I see a hidden risk here: if 100% of revenue goes toward buybacks, the protocol may have no resources left for development and marketing, which in the long run could undermine competitiveness. The success of this model will depend on whether Ethena can generate stable profits amid rate volatility, which remains highly questionable.