Ethena’s July - September 2026 Governance Update

BlockworksAdvisory · October 13, 2026, 8:22am

Welcome to Ethena’s governance update for July to September 2026, covering all major developments across the third quarter. This report highlights the July supply contraction and the subsequent recovery to $4.9B by quarter end, the return of the basis trade as a material share of USDe backing, the election of the fifth term Risk Committee and the approval of the ENA fee switch, alongside a broad expansion of USDe distribution across Robinhood, Coinbase, Binance, Morpho and the newly launched Ethena Pay.

Key Takeaways

Supply Recovery: USDe supply declined from $4.51B on July 1 to a quarterly low of $3.90B at the end of July, following concentrated redemptions between July 7 and July 13. Supply then recovered through August and September, peaking at $5.00B on September 27 and closing the quarter at $4.94B. September alone added over $700M of supply.
Yield Expansion: The sUSDe 7-day moving average APY rose from 3.8% at the start of July to 5.0% at quarter end, with the 30-day moving average rising from 3.9% to 4.8%. The increase tracks a higher yield on backing assets, with annualized USDe fees rising from 4.5% of supply in July to 5.3% in September. The sUSDe share of fee allocation fell from 34% to 27%, broadly in line with the staking ratio, which fell from 38% to 26%.
Protocol Solvency and Reserve Fund: Backing assets tracked USDe supply throughout the quarter. As of October 12, the backing ratio stood at 101.43% and the Reserve Fund balance was $62.57M against a recommended Reserve Fund size of $45.7M, a multiple of 1.4 times. The recommended size compares with $2.84M in the May update and reflects the RWA backing buffer and the $20M PSM buffer, together with a larger perpetual portfolio.
Basis Trade Re-expansion: Hedged BTC and ETH positions grew from a negligible share of backing in July to $0.84B (17% of backing) by September 30, with Binance as the dominant hedging venue. The Risk Committee published a framework for extending the basis trade to tokenized equities (August 28), and Ethena named Binance as the first venue for equity perpetuals (September 25).
Governance Milestones: Kairos Research, OAK Research and Blockworks Advisory were confirmed as the fifth term Risk Committee on August 21. The ENA fee switch activation proposal passed its Snapshot vote, directing up to 95% of net revenue to ENA buybacks once USDe supply milestones are reached, starting at $7.5B of USDe supply.
Distribution Growth: USDe on Robinhood Chain crossed $300M, the Coinbase DeFi earn product crossed $300M, USDe became the largest dollar collateral asset on Morpho, and the Ethena Pay beta launched on Avalanche with a staged rollout across 48 countries.
Whitelabel Contraction: Total Whitelabel stablecoin supply (jupUSD, USDm, suiUSDe) fell from $284M on July 1 to $66M by quarter end, driven by the unwind of USDm (MegaETH) between July 8 and July 11.
DeFi Footprint: USDe related deposit TVL across Aave, Morpho, Jupiter Lend and Kamino rose from $2.76B to $2.98B, with Morpho tripling from $0.29B to $0.87B. Pendle TVL fell from $38M to near zero after the sUSDe 13 Aug 2026 maturity.

Protocol and Risk Metrics

Supply and Yield

USDe: Supply closed the quarter at $4.94B, up from $4.51B on July 1, a net increase of 9.5%. Redemptions concentrated between July 7 and July 13, including a single day redemption of $235M on July 10, reduced supply to $3.93B by July 13, and after a brief rebound supply drifted to a low of $3.90B by the end of the month. The July contraction coincided with the unwind of the USDm whitelabel stablecoin, whose supply fell by $250M over the same days. Supply recovered gradually through August, from $3.93B to $4.18B, and accelerated in September, rising by $0.76B over the month on sustained USDT and USDC mint flows.

sUSDe: Total staked USDe declined from $1.67B at the start of July to $1.26B on September 30, and the staking ratio fell from 38% to 26%. The ratio held near 40% through early August before declining steadily from the second week of August onward. Supply growth in the quarter accrued primarily to unstaked USDe: USDe supplied directly to lending markets rose by $0.51B over the quarter, while sUSDe deposited in the same markets fell by $0.29B. As of October 12, total staked USDe stood at 1.212B, with a staking ratio of 25.45%.

Protocol Yield: The sUSDe 7-day moving average APY rose from 3.8% to 5.0% over the quarter, with the 30-day moving average rising from 3.9% to 4.8% and the 90-day moving average from 3.9% to 4.4%. The 1-day APY reached 5.3% on September 30. The yield increase tracks the yield earned on backing assets where annualized USDe fees rose from 4.5% of average USDe supply in July to 5.3% in September. The sUSDe share of fee allocation fell from 34% to 27%, broadly in proportion to the staking ratio, so the dollar amount allocated to stakers held near $5.3-5.4M per month while each staked dollar earned a higher rate. At quarter end, the sUSDe APY stood 1.5 percentage points above Sky USDS on a 7-day moving average basis, while the 7-day average supply APR on Aave’s USDe market fell from 1.9% in mid-August to 0.4%.

Source: Blockworks Ethena Dashboard, Overview, July 1st to September 30th, 2026

Source: Blockworks Ethena Dashboard, sUSDe, October 12th, 2026

Source: Blockworks Ethena Dashboard, sUSDe, July 1st to September 30th, 2026

Liquidity and Redemptions

USDe DEX liquidity declined from $68-74M in early July to $60M in mid-July and settled at $49-52M from July 25 for the remainder of the quarter, closing at $49M. Curve on Ethereum remained the dominant venue at $36M, followed by Uniswap on Ethereum and Fluid on Mantle. The mint/redemption contract held between $80M and $96M across USDT, USDC and USDtb in broadly equal proportions, and its balance did not fall below $80M during the July redemption wave, which included single day redemptions of $164M on July 9 and $235M on July 10. Flows reversed in mid-July with a single day mint of $220M on July 14, predominantly in USDT, and net minting dominated from mid-August onward.

Source: Blockworks Ethena Dashboard, USDe, July 1st to September 30th, 2026

Source: Ethena USDe (Risk) | Analytics | Blockworks Intel

Risk and Resilience Metrics

Solvency: Total backing tracked USDe supply throughout the quarter, closing at $4.95B on September 30. As of October 12, the protocol backing ratio is 101.43%, with $4.83B in backing assets including the Reserve Fund against $4.76B in USDe supply.

Reserve Fund: The Reserve Fund balance is $62.57M, broadly unchanged from the $62.5M reported in May, representing a coverage ratio of 1.314% of USDe supply, down from 1.387% as supply expanded. The Reserve Fund is sized to cover the costs of a worst case scenario in which all perpetual positions are unwound within 24 hours during severe market stress. The recommended size is the sum of three components. The funding rate reserve applies the worst 0.1% of historical funding rates for each asset and venue pair to Ethena’s current perpetual allocations and adds 50 bps of slippage on closing short perpetual positions and selling spot holdings, based on the maximum slippage observed during the Bybit hack incident. The RWA backing buffer adds 4.5% of Ethena’s RWA backing. The PSM buffer adds a fixed $20M to support the peg stability module. On this basis, the recommended Reserve Fund size shown on the dashboard is $45.7M, compared with $2.84M in the May update. The increase reflects the RWA backing buffer and the PSM buffer, together with a larger perpetual portfolio following the re-expansion of the basis trade, and reduces the multiple of the fund over its recommended size from 22 times to 1.4 times.

Collateral Composition: As of September 30, total backing is $4.95B. Liquid cash, comprising stablecoins, lending positions and institutional lending, accounts for $3.7B (74%). Hedged BTC and ETH positions account for $0.84B (17%), of which $0.47B BTC and $0.36B ETH. RWA positions (JAAA and STAC) account for $0.28B (6%), down from $0.50B (11%) at the start of July. At the start of the quarter, liquid cash represented 85% of backing and the basis trade was negligible. USDm, held in backing at the start of July, exited backing during the July whitelabel unwind.

Exchange Venue Mix: Exchange exposure re-emerged as a material share of backing from August 20. By September 30, Binance accounted for 12% of total backing, OKX 4% and Bybit 2%, with the unallocated share of backing falling from 95% in July to 80%. Thus, Binance represents 60-67% of exchange exposure, depending on whether the dashboard’s Others category is counted as exchange exposure. The dashboard presents exchange shares as a percentage of total backing, including unallocated assets, so these figures are not directly comparable with the exchange only shares reported in May.

Liquid Cash Breakdown: Within liquid cash, stables on loan in DeFi lending markets declined from 52% at the start of July to 44% at quarter end, while blue chip stables rose from 31% to 36%. Institutional lending, reported as a separate category from mid-July, reached 8% by September 30. Ethena stables fell from 11% to 3%. Within lending markets, Aave’s share of deposits fell from 60% to 43-47%, while Morpho rose from 15% to 21-28%, Jupiter Lend from 12% to 16-19% and Kamino from 12% to 13-14%.

Cooldown Framework: The dynamic cooldown remains set at 1 day. Tier 1 (1-day settlement) assets rose from 34% of liquid cash on July 1 to 44% at quarter end, Tier 2 (2-day settlement) fell from 31% to 20%, and Tier 3 (5-day settlement) moved from 35% to 37%. The daily Tier 1 redemption cap ranged between $830M and $1.07B and closed the quarter at $910M. The 1-day liquid coverage ratio ranged between 4.3x and 6.5x, with a low on September 22, and closed at 4.5x; the 3-day and 7-day coverage ratios closed at 2.9x and 3.6x. All three measures remained above the 1.5x safety floor throughout the quarter, which satisfies the condition for the 1-day cooldown setting under the dynamic cooldown framework. The cooldown stress endurance metric shows that Tier 1 liquidity sustains between five and nine days of maximum stress outflows before the 1x floor is breached, and six days at quarter end.

Source: Ethena USDe (Risk) | Analytics | Blockworks Intel

Source: Blockworks Ethena Dashboard, USDe (Risk), October 12th, 2026

Source: Blockworks Ethena Dashboard, USDe (Risk), July 1st to September 30th, 2026

Ecosystem Expansion and Integrations

Robinhood Chain: Ethena partnered with Robinhood to bring its product suite to Robinhood Chain in July. Ethena assets on the network crossed $200M within a month, and by August USDe crossed $300M, representing approximately 40% of total digital dollar supply on the network. USDe native prediction markets also went live on Robinhood Chain via Meridian, formerly Ethereal.
Coinbase: The USDe vault on Coinbase crossed $250M one month after launch in July, and Ethena assets in the Coinbase DeFi earn product crossed $300M in August, a new all time high.
Binance: Ethena partnered with Binance as the first venue for extending the basis trade into equity perpetuals, using bStocks as tokenized spot collateral (September 25). Binance Wallet enabled USDe rewards in September.
Ethena Pay: Ethena launched the Ethena Pay beta on September 1, a self custodial money app built on Avalanche that holds USDe as a dollar balance, with a staged rollout across 48 countries, savings rewards of up to 6% and a payment card.
Institutional lending: FalconX joined as an institutional lending partner in August; LlamaRisk published its legal review of the FalconX Credit Agreement on August 4. LlamaRisk also reviewed the Payward (Kraken) Master Loan Agreement in July.
Morpho and Aave: USDe became the second largest collateral asset and the largest dollar collateral asset across Morpho in September, backing two of the three largest markets on the protocol. USDe rewards went live in the dedicated Ethena ecosystem market on Aave V4 on Ethereum.
Minting costs: Minting and redeeming USDe with USDC became free for all onboarded mint users in July, Bybit enabled free USDe minting and redemption with USDC, and USDT mints became free at 0 bps for all onboarded mint and redeem users in August.
Ecosystem update and tokenomics: On August 27, the Ethena Foundation announced the buyout of locked tokens held by certain seed investors, an accelerated release of remaining investor tokens to alleviate future unlock overhang, an agreement in principle on a Master Framework Agreement with Ethena Labs and the fee switch proposal. Ethena subsequently announced that there will be zero token incentives and inflation related to USDe from the end of September onward.
New chains and integrations: USDe and sUSDe went live on Monad, USDe went live on TRON, Kraken added USDe deposits and withdrawals on Avalanche and launched Ethena powered dollar savings on Kraken+ in the US, Gate launched its first USDe earn product, Lido added USDe to EarnUSD and Origin Protocol opened the sUSDe ARM for deposits.
USDtb: Maple selected USDtb as a core holding within the USD liquidity buffer supporting syrupUSDC and syrupUSDT.
Security: Ethena completed a SOC 2 Type II audit against the Security Trust Services Criteria with a clean opinion and zero exceptions noted.

Collateral and DeFi Footprint

Ethena assets continue to serve as major collateral across lending and yield markets. The Blockworks dashboard reports USDe related deposit TVL across Aave, Morpho, Jupiter Lend and Kamino in a single lending markets view, which replaces the separate Aave and Morpho charts used in previous updates.

Lending Markets

USDe related deposit TVL across the four lending protocols rose from $2.76B on July 1 to $2.98B on September 30, after a dip to $2.55B on July 13 and a peak of $3.09B around September 19. Aave remained the largest venue but declined from $1.95B to $1.67B. Morpho grew from $0.29B to $0.87B, consistent with USDe becoming the largest dollar collateral asset on the protocol. Jupiter Lend and Kamino held at $0.20-0.26B and $0.24-0.27B respectively. By asset, USDe deposits rose from $1.89B to $2.40B while sUSDe deposits fell from $0.86B to $0.57B, and PT and eUSDe positions, small at the start of July, were no longer material.

Source: Blockworks Ethena Dashboard, DeFi Footprint, July 1st to September 30th, 2026

Pendle Markets

Ethena related TVL on Pendle held at $35-41M through July and early August, concentrated in the sUSDe 13 Aug 2026 market, excluding intermittent single day spikes in the matured sUSDe 18 Jun 2026 series. Following the August 13 maturity, TVL fell to $5M by August 20 and to near zero by the end of September. The chart covers Pendle markets on Ethereum only.

Source: Blockworks Ethena Dashboard, DeFi Footprint, July 1st to September 30th, 2026

Whitelabel Stablecoins

Total Whitelabel supply (jupUSD, USDm, suiUSDe) rose from $284M on July 1 to a peak of $349M on July 8, then fell to $99M by July 11 as USDm (MegaETH) supply contracted from $286M to $35M. USDm continued to decline to $10M by quarter end. jupUSD eased from $51M to $44M and suiUSDe held at $12-13M, leaving total Whitelabel supply at $66M on September 30.

Source: Blockworks Ethena Dashboard, Whitelabel SaaS, July 1st to September 30th, 2026

Governance Activity

The Risk Committee and its service providers published reviews covering a new mint and redemption facility, two new backing assets (mUSD and GHO), two institutional lending agreements, a tokenized equity basis trade framework and an allocation to Morpho Midnight, alongside the Risk Committee re-election and the ENA fee switch vote.

Review of the L2 USDe PSM Proposal (July 22): Kairos Research analysed L2 peg stability module allowing an approved market maker to swap USDC and USDG for USDe atomically near mint cost, seeded with a float of 10M USDe per chain (20M total) at a 5 bps fee, subject to five deployment and custody conditions. Guardian’s audit found no Critical or High issues. Blockworks Advisory provided an independent Reserve Fund sizing and demand analysis, finding the 20M float at the upper end of estimated demand and below available reserve capacity, and supported the proposal on the terms of the Kairos review.
Risk Committee Re-election (July 22 to August 21): The Ethena Foundation opened the re-election process for the three seat Risk Committee on July 22, with ranked voting on Snapshot between August 3 and August 9. On August 21, the Foundation confirmed Kairos Research, OAK Research and Blockworks Advisory as the fifth term committee, after K3 Capital ineligibility based on structural and ongoing conflicts of interest.
mUSD as a USDe Backing Asset (July 23): LlamaRisk supports onboarding mUSD, issued by Bridge (a Stripe company) on M0 infrastructure, under a phased, capped allocation, including deployment into the Aave v3.7 instance on Monad. mUSD supply was $32.2M as of July 15. The review flags freeze and forced transfer roles held by single externally owned accounts and conditions scale up on demonstrated redemption performance and recurring third party reserve attestations.
Legal Review of the Payward MLA (July 23): LlamaRisk reviewed the Master Loan Agreement with Payward Trading Limited (Kraken), which uses a tri-party custody arrangement with Anchorage holding collateral outside the borrower group, and supports the Risk Committee’s approval.
Legal Review of the FalconX Credit Agreement (August 4): LlamaRisk reviewed a revolving senior secured credit facility from Ethena to a bankruptcy remote FalconX vehicle that purchases crypto-backed institutional loan receivables, secured by an all assets first priority security interest with daily loan level reporting, and supports the Risk Committee’s approval.
ENA Fee Switch Activation (August 27): Ethena Labs Research, in collaboration with the Risk Committee, proposed supply milestones under which the share of protocol revenue captured rises from 5% at $7.5B of 14-day average USDe supply to 10% at $10B, 15% at $15B and 20% at $20B, with 95% of the net revenue paid to the Ethena Foundation from USDe savings, whitelabel stablecoins and Ethena X directed to ENA buybacks. Blockworks Advisory, Kairos Research and OAK Research supported the design, with Blockworks recommending the 14-day trailing average trigger and disclosure of competitiveness risk. The Snapshot vote passed, as confirmed on the forum on September 8.
A Framework for the Tokenized Equity Basis Trade (August 28): Kairos Research proposed a five part approval test for long tokenized stock, short equity perpetual positions, under which 17 of 67 matched pairs on Binance ($2.14B of open interest) and three on OKX qualify. The framework recommends approving bStocks subject to a side letter covering custody, reconciliation, dividend treatment and key management, sets sizing guidance and automatic halt triggers, and identifies the single upgrade key over bStock tokens and closed market index pricing as open risks.
GHO and sGHO as Eligible Backing Assets (September 21): Kairos Research assessed GHO and sGHO as directly held USDe backing and recommends a single allocation of up to $50M with no top-ups, identifying exit liquidity through the Aave stability modules as the binding constraint. Blockworks Advisory’s assessment followed on October 6.
Asset Allocation to Morpho Midnight (September 21): OAK Research supports a $20M USDC deployment into Morpho Midnight fixed rate loans at 6% APR against cbBTC collateral on Base at an 86% LLTV, for 30 to 60 days, conditional on waived protocol fees, a confirmed liquidation setup and a review at the end of the first cycle.

Monthly Revenue

Total protocol gross fee income was $17.6M in July, $18.4M in August and $21.3M in September, $57M for the quarter. USDe fees accounted for $15.9M, $17.2M and $19.8M respectively, with the September increase coinciding with supply growth and the re-expansion of the basis trade. USDtb interest income was $1.7M in July, $1.2M in August and $1.5M in September, below the $2.4M recorded in May. Mint fees accounted for 3-5% of USDe fees on average, with a peak share of 31% on July 14 during the large USDT mint. Fee allocation shifted materially over the quarter: the Aave liquid leverage program rose from 27% of USDe fee allocation in July to 47% in September, while sUSDe staking APY declined from 34% to 27% and partner rewards from 39% to 27%.

Source: Blockworks Ethena Dashboard, Financials, July 1st to September 30th, 2026

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Ethena’s July - September 2026 Governance Update

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