Ethena held through the run on redemptions and came out a third of the size

How does a synthetic dollar stay still?

The sum is simple: if the collateral rises ten percent, the position it bought gains ten and the one it sold loses the same. The total stays at zero. That’s what lets Ethena back every dollar issued with a single dollar, where an overcollateralized stablecoin like DAI asks for one and a half.

The balance rests on one assumption, though: that the spot price and the perpetual price move together. In normal conditions it holds, because arbitrageurs keep them in line. But when an exchange halts trading or the liquidity dries up, the two prices come apart, and in those hours the hedge doesn’t hedge.

How much real adoption is left?

What deflated was the leverage, more than anything like a run. The positions built on top of the yield left: the ones where you deposit, borrow, deposit again and start over. The wallets holding USDe as a dollar stayed. sUSDe’s yield, meanwhile, is at 5%.

What’s left, though, is scaffolding a good part of decentralized finance now leans on: USDe is accepted as collateral by Aave, Pendle, Morpho and Curve, and unpicking those integrations costs more than keeping them. A protocol that deflates is a different thing from one that disappears.

Does the revenue hold when the market cools?

Funding exists to keep the perpetual tied to the spot price. When lots of people buy with leverage, the perpetual trades above spot, and every eight hours the longs pay the shorts. Ethena, always on the short side, collects. When the optimism fades, the payment shrinks and the revenue with it.

Under that payment, though, there’s a base that doesn’t depend on the market’s mood: the part of the collateral held in staked ether earns three or four percent a year regardless. That’s why in June sUSDe’s yield fell to 7.1 percent without ever reaching zero.

How liquid is USDe on the day it counts?

On October 10, 2025 USDe touched $0.65 on Binance’s order book during the liquidation cascade, while remaining fully backed; the price came back within hours.

Being backed and being liquid are two different things. The collateral was all there, but at that moment the people who could have bought were closing their own positions, and the price went wherever the few remaining orders sent it. Whoever sold there really lost money; whoever waited got their dollar back.

This risk can’t be removed, because it depends more on the market where USDe trades than on Ethena. You can account for it, though: if you need money available at a moment’s notice, USDe isn’t the place to keep it.

How many counterparties does the collateral depend on?

Keeping them apart is the smartest thing they’ve done. Ethena doesn’t transfer the collateral to the exchanges. It pledges it as margin, and legal ownership stays with the custodian. If an exchange goes bust that collateral doesn’t end up in the bankruptcy estate.

And we already know it works. In February 2025 Bybit, one of the exchanges where Ethena held its hedge, suffered the biggest theft in the sector’s history, about a billion and a half dollars. Ethena’s collateral was with the custodian, and only some thirty million of derivatives margin was left on that exchange, and that was cut to zero the same day. Ethena lost nothing.

A real dependency remains, though. In a systemic crisis the trouble hits several exchanges at once, and in that case the hedge would turn into a claim to collect instead of a position to close.

Does the governance count for anything?

The fee switch stays off because of a real conflict, more than a technical problem. Sending a share of the revenue to token holders means taking it out of sUSDe’s yield, which weakens the only reason anyone prefers USDe to any other dollar. It’s the same money, the two sides are fighting over it, and so far the side that brings in customers has won.

This is a judgment and not a measurement, because there’s no sensible way to measure how real governance is. What you can see is that the important decisions have never gone through a vote: which exchanges to be on, how much to keep in the reserve fund and when to change collateral.

Does the team hold up?

The tests come through: in February 2025 the billion-and-a-half theft suffered by Bybit, with Ethena exposed for some thirty million on derivatives and no losses; on 10 October 2025 the liquidation cascade, with USDe at $0.65 and the price back; between October 2025 and March 2026 the contraction from fourteen to $5.92 billion, declared in the quarterly reports.

And it told the story well. The fall from fourteen to $4.52 billion is in the quarterly reports, plainly written, and so is the drop in revenue. They also wrote about October’s depeg instead of pretending nothing had happened. In a sector where uncomfortable numbers disappear from press releases, that counts for something.

It’s a judgment, so it holds as long as the people who earned it stay. And in a system where the hedges have to be rebalanced across four exchanges around the clock, the team and the product are the same thing.

How much does the mechanism risk?

Against the first scenario there’s a declared defense: the protocol keeps five percent of that payment when it’s in its favor and sets it aside in a reserve fund. On the history available it holds, because even in the worst years the days when the payment went the other way were about one in ten. But that fund is sized for episodes lasting days, not months.

Put bluntly: every time a stablecoin offers a double-digit yield, the comparison with Luna and UST arrives before any analysis of the mechanism.

The difference from a year ago is that two scenarios have left the realm of theory: the cascade came and the price recovered, the attack on an exchange came and the exposure stayed marginal. What nobody has seen yet is the long scenario, months of negative payments in a row, which is the one case the reserve fund can’t cover.

Comparison between ethena and its direct competitors in the same category, on the measured criteria, all taken on november 2, 2026 from the same source (defillama). In circulation: ethena $4.52bn, sky $6.39bn, usual $540m. Capital backing: ethena $4.53bn, sky $5.04bn, usual $80m. Fees, 30 days: ethena $17.21m, sky $28.35m, usual $0.35m.