Thread by @EntropyAdvisors

.@ethena_labs is now a top 5 DeFi protocol by TVL, earning $300M+ in revenue.

As a result, @wintermute_t's fee switch proposal has been approved by Ethena's Risk Committee.

Explore our 2 new dashboards for details on the fee switch and Ethena's financials:

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1/ Why is a fee switch needed?

Currently, 824M ENA ($324M) are staked, which represents 5.5% of the total ENA supply. However, stakers only receive point rewards from partnering protocols and unclaimed ENA airdrops and do not have direct exposure to the revenue generated by Ethena.

Aligning ENA holders enables the protocol to rely more on the DAO for governance decisions, leveraging the community to build for Ethena's future.

2/ What is Ethena's Revenue and where is it spent?

Ethena generates revenue mainly by capturing the funding rates from the perp market. 100% of the reward is distributed to USDe stakers and the reserve fund.

In the past 3 months, Ethena has averaged $50M in monthly revenue.

3/ If the fee switch is activated, what is the expected yield?

Below is a simulation of the monthly APR for $30M, $50M and $70M in monthly revenue, considering different amounts of ENA staked and the percentage (5%, 10%, and 15%) of revenue distribution.

4/ So when will the fee switch be activated?

The risk committee has outlined 5 key parameters in two areas: Success Metrics and Risk Metrics. Ethena must meet all these parameters to activate the fee switch.

This process ensures that the protocol is in a strong position before sharing revenue with the community.

5/ Parameter 1: 6B USDe Supply ❌

USDe is currently 9% away from the Fee Switch Target, a goal within reach since it hit an all-time high supply of 6.1B on February 2.

6/ Parameter 2: $250M+ Cumulative Revenue ✅

Ethena reached $250M in cumulative revenue on January 2, 2025, and is currently at $330M.

7/ Parameter 3: Integration with Binance/OKX ❌

Bybit is one of the exchanges with the highest USDe adoption, holding nearly 700M USDe at its peak. Other top-tier exchanges like Bitget, KuCoin, and Gate have also been integrating with USDe.

While there's no timeline for Binance/OKX integration, Binance began holding a significant amount of USDe on February 23, with 4M in holdings.

8/ Parameter 4: Reserve Fund Ratio ≥ 1% of USDe supply ✅

With a $61 million reserve fund, it can support USDe's circulating supply up to 6.1 billion. The reserve fund acts as an additional safety net for USDe and can help Ethena weather a negative fund rate environment.

9/ Parameter 5: sUSDe vs sUSDS APY Spread ≥ 5% ❌

During periods of high funding rates, sUSDe can achieve a significantly larger APY spread compared to sUSDS, with approximately 20% APY. However, due to the recent market downturn, the funding rate has decreased from December 2024 levels.

We anticipate the spread will widen again once the market momentum returns.

10/ Lastly, you can find Ethena's monthly financials in a single table.

The table provides insights on:
- ENA: Price, Staking Ratio, FDV
- USDe: Liquidity, Revenue, Reserve Fund, Staking Ratio, APY Spread
- USDtb: Liquidity, Revenue
- Valuation: FDV-TVL, FDV-Revenue

We hope you enjoyed our thread and look forward to building analytics for the Ethena network and Ethereal in the future.

For more information, visit the two dashboards linked below:

1. Fee Switch: dune.com/entropy_adviso…
2. Protocol Master Metrics: dune.com/entropy_adviso…