Ethena, the issuer of the USDe synthetic dollar, has put forward a governance proposal that would route 95 percent of protocol revenue into buying back its ENA token. The plan, published on the project’s governance forum, marks one of the most aggressive revenue-sharing schemes among large decentralized protocols and puts direct buy pressure on a token that has traded well below its 2024 highs.
Under the proposal, the remaining 5 percent would cover operational costs and a reserve buffer. The exact mechanics, including whether buybacks run continuously or in scheduled batches and which venues they use, are still open for discussion before the proposal moves to an on-chain vote. The forum thread has drawn heavy traffic since the plan went up, with several large holders voicing support and a smaller group questioning the reserve math.
Why now
Ethena’s revenue comes largely from the funding rates collected on the hedged positions that back USDe. When traders pay high perpetual funding rates, as they have during recent volatility, the protocol earns more. Funding income has been uneven this year, and ENA has lagged the broader market, which has made token holder returns a live political issue inside the community.
Several large holders have argued for months that the protocol was accumulating treasury assets without giving enough back to the token. The 95 percent figure appears designed to answer that criticism in one move. Critics on the forum have already asked whether leaving only 5 percent for reserves is prudent for a protocol whose revenue depends on funding rates that can flip negative in bear markets, turning a profitable quarter into a loss with little warning.
The proposal’s sponsors have responded that the protocol’s existing treasury, built during high-revenue periods, serves as the real buffer. On that reading, the 5 percent operating slice only needs to cover recurring costs, not absorb shocks, because the balance sheet already exists. Skeptics reply that treasury funds are governed separately and could be committed elsewhere by a future vote, which would leave the operating slice as the only guaranteed cushion.
There is also a timing argument running through the thread. Supporters say committing revenue now, while funding rates are elevated and the protocol is earning well, locks in a distribution habit before the next downturn. Opponents say that is precisely the wrong moment to give away flexibility, since reserves should be built when revenue is strong and spent when it is weak.
How it compares
Buyback-and-distribute models have become the standard answer to token holder frustration across decentralized finance. Hyperliquid routes a large share of its fees to buy back its HYPE token through an assistance fund. Pump.fun channels fee revenue into buybacks of its own token. Ethena’s proposal would put it at the aggressive end of that spectrum, committing nearly everything rather than a fixed slice.
The difference matters for risk. A protocol that commits 95 percent of revenue has little flexibility if costs spike or an incident requires an emergency reserve. Ethena’s answer, according to the proposal text, is that existing treasury holdings provide the cushion, with the revenue share applying to ongoing income rather than the balance sheet. That argument has carried the day in comparable governance fights elsewhere, but each protocol’s cost base is different and the comparison only goes so far.
The model has worked as a price support where it has been tried. Tokens with committed buybacks have generally held value better during drawdowns than comparable tokens without them, though the sample is short and most such programs launched during favorable markets. Whether the support holds in a genuine bear market remains untested for most of the cohort.
The USDe context
USDe is a synthetic dollar backed by crypto collateral and offsetting short positions, earning its yield from the spread between staking returns and funding payments. The design has drawn both large inflows and persistent questions about how it behaves when funding rates turn negative for extended periods, as they did in past downturns.
The protocol has so far navigated those episodes without breaking its peg, and its supply has grown again this quarter as markets turned risk-on. A steady buyback program would add a new source of demand for ENA on top of the protocol’s growth, though the token’s price will still track the health of the underlying strategy. Analysts who cover the protocol have noted that buybacks of a token whose emission schedule is still active can be partially offset by new supply from vesting, a dynamic the proposal does not address directly.
Regulatory shadow
Any revenue distribution to token holders invites scrutiny from regulators who have treated yield-bearing crypto assets as potential securities. The United States has moved toward clearer stablecoin legislation this year, but the treatment of governance tokens that capture protocol revenue remains unsettled. Ethena’s structure, which distributes value through buybacks rather than direct yield payments, is a common way to reduce that exposure, and the buyback design here follows the pattern other protocols have used for the same reason. No regulator has commented on the proposal, and the project has not sought a legal opinion in public.
What to watch
The governance discussion will settle three details: the buyback venue, the batching schedule, and whether a threshold exists below which the protocol pauses buybacks to protect reserves. Each has been raised in forum comments, and the final on-chain proposal is expected within days.
If the vote passes, Ethena would become one of the largest recurring buyback programs in decentralized finance by revenue share. The more meaningful test comes later, in the first sustained period of negative funding rates after the program starts, when the 5 percent reserve allocation meets its first real stress test. How the team handles that stretch will say more about the model’s durability than any vote. For now, ENA holders get what they asked for, and the protocol gets one less thing to argue about until the next downturn.