Ethena’s foundation just dangled a carrot in front of ENA holders: automated buybacks funded by nearly all of the protocol’s net revenue. The catch is that USDe, Ethena’s synthetic dollar, needs to roughly double its circulating supply first.
The proposal, put to a governance vote that closes September 2, would activate a “fee switch” once USDe reaches $7.5 billion in circulation. At that point, 95% of net revenue from Ethena’s operations would flow into automated ENA purchases on the open market. Current USDe supply sits somewhere around $4 billion to $4.6 billion, meaning the trigger requires approximately 85% growth from where things stand today.
Markets responded before the ink was dry. ENA surged roughly 16-23% intraday to around $0.17, capping off a broader rally that saw the token climb more than 70% over the preceding week.
The full restructuring package
The buyback proposal is the flashiest piece, but it sits inside a larger restructuring effort the Foundation unveiled on August 27. The package addresses three distinct pressure points that have weighed on ENA’s price trajectory.
First, the Foundation is conducting OTC buyouts of locked ENA from seed investors who hold allocations greater than 0.25% of total supply. These are investors who had already sold their stakes after ENA hit a peak on October 10, 2025. Buying out their locked positions removes a known overhang of future selling pressure.
Second, upcoming investor token unlocks are being consolidated and accelerated into a single phase on October 5, 2026. Rather than letting unlocks drip out over multiple months, the Foundation is compressing the pain into one event. Team tokens, notably, remain locked.
Third, an in-principle agreement expected in October 2026 would secure Ethena’s protocol intellectual property and economic benefits primarily for the Foundation itself, creating separation from Ethena Labs’ equity holders.
The math behind the fee switch
The fee switch operates on an incremental model. At the $7.5 billion USDe threshold, the Foundation estimates approximately $22.5 million in annualized revenue would be available for buybacks, assuming a 6% APY on the protocol’s underlying positions. Higher USDe supply milestones would unlock progressively larger buyback allocations.
There is a trade-off baked into this structure. Routing 95% of net revenue toward ENA buybacks means reducing USDe distributions, the yield payments that have been one of the protocol’s primary draws for stablecoin holders.
USDe’s circulating supply peaked at around $15 billion in October 2025, roughly three times higher than where it sits now. The subsequent contraction, losing more than two-thirds of its supply, is a reminder that synthetic dollar demand can evaporate quickly when market conditions shift. Getting back to $7.5 billion would still represent just half of that prior peak.
What this means for ENA holders and DeFi broadly
The conditional nature of the buyback is worth sitting with. Unlike protocols that simply announce buybacks and execute them regardless of conditions, Ethena is making its token holders root for the underlying product’s growth. If USDe doesn’t expand, the buyback never activates.
The OTC buyout of seed investors addresses one of the most reliable sources of selling pressure in crypto markets. By proactively purchasing locked allocations from investors who have already demonstrated willingness to sell — they offloaded positions after the October 2025 peak — the Foundation is trying to remove the most motivated sellers from the equation before they ever hit the open market.
The consolidation of remaining unlocks into a single October 2026 event eliminates months of drip-feed uncertainty but concentrates potential selling pressure into one window.
One risk worth flagging: the entire buyback mechanism depends on Ethena’s revenue, which itself depends on the basis trade that underpins USDe’s yield. In periods where funding rates compress or turn negative, that revenue shrinks. A scenario where USDe reaches $7.5 billion but funding rates have collapsed would produce buybacks too small to meaningfully support ENA’s price — a possibility the annualized $22.5 million estimate doesn’t fully capture since it assumes a steady 6% APY.
The governance vote concludes September 2. For a protocol that once commanded $15 billion in synthetic dollar circulation, reaching half that number would still require approximately 85% growth from current supply levels.