Ethena’s May 2025 Governance Update

General
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We are pleased to present the third installment of Ethena’s monthly governance update, covering all the latest developments in the month of May. This report reviews the latest protocol metrics, governance proposals, and ecosystem developments.

Key Takeaways

  • Protocol Growth Resumes: USDe supply grew by $500M in two weeks as funding rates rebounded in mid-May, prompting a shift back toward basis trade backing.
  • USDe Resilience Maintained: Despite changing market conditions, backing ratio held strong at 101.87%, with Reserve Fund reaching $61.1M.
  • Governance in Action: Two Risk Committee–vetted proposals passed with 99.7% support, providing approval for Ethena to use USDe’s backing to lend USDtb, USDC, and USDT into Aave

Protocol Metrics

  • Protocol Metrics

    • Total USDe Supply: $5.22B
    • USDe Staked: 46%
    • Protocol Backing Ratio: 101.87%
    • Reserve Fund: $61.1M
    • Current APY: 7.10%

  • Ethereum rallied sharply in mid May, pushing funding rates higher alongside.

  • USDe supply started growing, increasing by over 500mm in the past two weeks.

  • USDe backing began shifting away from liquid stables back towards the basis trade. The allocation to liquid stables decreased from roughly 70% on April 30th to 48% by May 28th.

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  • Fee Switch Metrics:

    • USDe circulating supply: $5.22B (threshold: >$6bn)
    • Cumulative protocol revenue: $353M (threshold: >$250mm)
    • CEX adoption: USDe CEX adoption: 3 (threshold: 4 of top 5 CEX by derivatives volume)
    • sUSDe APY spread vs benchmark: 2.79% (threshold: 5.0-7.5%)

  • Recent Pendle Maturities

    • sUSDe 29 May 2025 → $438M
    • eUSDe 29 May 2025 → $665M

A combined $1.1B of USDe related Pendle products matured at the end of May and was absorbed well by the market. After maturity, the total supply of USDe was relatively unchanged around 5.22bn and the percentage of staked USDe decreased by roughly 3%, which is similar to the effect seen by previous sUSDe pendle maturities, adjusted for relative size.

  • Future Pendle Maturities
    • sUSDe 25 June 2025 (BNB) → $27M
    • sUSDe 30 July 2025 → $1.14B
    • USDe 30 July 2025 → $122M
    • eUSDe 13 Aug 2025 → $222M
    • sUSDe 24 Sep 2025 → $2M
    • USDe 24 Sep 2025 → $2M

Protocol Update

  • Season 4 of Rewards Program: Distributions for Season 3 occurred in early May and the Season 4 rewards campaign is ongoing, with accruals beginning on March 24th. Ethena has indicated that Season 4 sENA distributions will at least match the 3.5% of supply distributed in Season 3.

Governance Activity

  • Proposal: Ethena Supplying USDtb to Aave market

    • The Ethena Risk Committee reviewed the proposal and recommended the following:
      • To mitigate the risk that looped USDtb positions could indirectly cause significant sUSDe supply volatility the market’s total supply cap should start with a conservative market supply cap of $50M, which corresponds to the current supply cap of USDtb on Aave. If caps get lifted on Aave, we will revert with an updated recommendation.
    • Additional in-depth analysis was provided on the forum by both Untangled and Blockworks
    • The proposal was submitted for a snapshot vote on May 14th, passing with 99.7% support on May 17th

  • Proposal: Onboarding Aave’s aUSDC and aUSDT as USDe Backing Assets

    • The Ethena Risk Committee reviewed the proposal and recommended the following:
      • Limit the USDT and USDC supply on Aave to ~ $600M (10% of their total USDT and USDC supply combined which would currently translate to $627M or below the minimum available liquidity over a 7-day horizon simulation). This restricts exposure to redemption, token-specific insolvency, and governance risks while also managing the inverse relationship between yield and available exit liquidity. Ethena is not expected to hit this cap anytime soon.
    • Additional in-depth analysis was provided on the forum by both Untangled and Blockworks
    • The proposal was submitted for a snapshot vote on May 14th, passing with 99.7% support on May 17th

Ecosystem Activity

  • USDe Debt Ceiling removed on Aave; eUSDe and eUSDe August PT tokens now live on Aave
    • Aave removed USDe’s debt ceiling and added a new E-Mode configuration, which went live on May 11th
    • Ethereal’s eUSDe and related August expiry PT tokens were officially approved for addition to Aave V3 Core and went live on May 27th
  • USDe is now live on Hyperlend
    • USDe can now be borrowed against HYPE or other tokens on the marketplace
  • USDtb markets live on Aave Core
    • USDtb was added to the v3 Core Instance with borrow enabled, collateral disabled as of May 11th.
  • New project OnRe launched in May
    • OnRe, which uses sUSDe as a backing asset, launched the ONe token on May 21, 2025. OnRe is a regulated onchain reinsurance company