Ethena ENA Surges 20% After Buyback Proposal and Token Supply Update

Key Insights:

• Ethena’s ENA soars over 20% following new updates that observers said will reduce selling pressure
• The project said it executed a buyout of all locked tokens from certain major seed investors.
• The project has also proposed a buyback plan that could see it spend up to 95% of its revenue on token repurchase.

Ethena crypto surged after the Ethena Foundation unveiled four changes covering early-investor tokens, future unlocks, protocol ownership, and revenue-funded ENA buybacks. ENA traded around $0.17 on Aug. 27 after gaining more than 20% during the session.

The strongest change involves a proposed fee switch that could direct 95% of net revenue from Ethena-branded businesses toward programmatic ENA purchases once USDe reaches its first supply milestone. The Foundation also moved to reduce uncertainty around recurring investor unlocks.

Beyond the buyout of locked tokens from investors, the project has also released all the original investors’ unlocks. With this move, seed investors are no longer subject to lock-up, and the monthly ENA unlocks.

The move effectively increased the circulating supply for ENA to 88% of its token supply. The remaining 12% that remain locked are tokens held by the team, foundation, and ecosystem.

According to the announcement, team tokens remain subject to the lockup and vesting schedules. Interestingly, 20% of the circulating supply is held by digital asset treasury firm StablecoinX, which is also subject to a lockup schedule.

Interestingly, another part of the update was an agreement in principle between Ethena Foundation and Ethena Labs regarding the project’s intellectual property. The post stated that there is now a framework agreement, and all Ethena Protocol IP would be assigned or licensed to the Ethena Foundation.

This means investors in Ethena Labs do not receive any economic upside or other benefits from the project. All value generated by the protocol will go to the foundation and ecosystem.

Meanwhile, part of the update is also a proposal to introduce a fee switch on Ethena. Per the proposal, 95% of net revenue from all its business lines should be allocated to buying back the ENA token once it reaches a set milestone.

It stated that the proposal aims to support the protocol’s growth and restore its USDe supply to its 2025 peak of around $15 billion. USDe’s current circulating supply is at $529 million according to DefiLlama.

However, the fee switch proposal requires a community vote before implementation. Voting is already live and is expected to close by September 2. So far, 100% of the 39 votes cast are in support of the proposal.

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