Ethena has locked in a plan to hand nearly all of its protocol revenue back to token holders. A governance proposal that closed this month commits 95% of net revenue across every Ethena business line to automated ENA purchases on the open market, but only once the circulating supply of its USDe synthetic dollar reaches $7.5 billion.
The vote passed with 14 million votes in favor and no recorded opposition, well above the 5 million votes required for passage. The proposal went live on August 27 and closed on September 2, according to the Ethena Foundation’s governance portal. Turnout itself was notable for a protocol whose token spent most of the past year in drawdown.
The supply gate
The buyback switch is tied to a single number. USDe circulated at roughly $4.06 billion when the proposal went up for a vote, which means the supply has to grow about 85% before a single dollar of revenue flows into repurchases. The Foundation estimates that at the $7.5 billion milestone, assuming a 6% APY on the protocol’s underlying positions, about $22.5 million in annualized revenue would be available for buybacks.
That estimate carries its own caveat. Ethena’s revenue depends heavily on funding rates paid by perpetual futures positions. When funding compresses or turns negative, revenue shrinks with it. A scenario where USDe reaches the threshold during a flat or inverted funding environment would produce smaller buybacks than the headline figure suggests. The Foundation’s own materials acknowledge this, noting that the $22.5 million figure assumes steady conditions rather than the funding cycles that have historically swung hard in both directions.
A three-part restructuring
The buyback proposal is one piece of a broader restructuring package the Foundation unveiled on August 27. The package targets selling pressure from three directions at once.
First, the Foundation is conducting over-the-counter buyouts of locked ENA from seed investors holding allocations above 0.25% of total supply. Most of these investors had already sold their liquid stakes after ENA peaked on October 10, 2025, so buying out the locked remainder removes future overhang from that cohort. The Foundation said in late August that it had bought back all tokens sold by major investors over the previous nine months.
Second, upcoming investor token unlocks are being consolidated into a single phase on October 5, 2026, instead of dripping out over several months. Team tokens stay locked under this arrangement. A separate unlock of 171.88 million tokens, worth about $27.57 million at announcement, was scheduled for September 5 under the existing schedule.
Third, an in-principle agreement expected in October 2026 would secure Ethena’s protocol intellectual property and economic benefits for the Foundation, separating them from the equity holders of Ethena Labs. That separation addresses a long-running complaint from token holders who argued that equity investors captured value the token never saw.
Token reaction
ENA climbed 16% to 23% intraday to around $0.17 when the proposal was announced, extending a week-long rally that had already lifted the token more than 70%. The move put the token back in the conversation among decentralized finance traders who had written it off after the 2025 peak faded.
The structure resembles fee-switch activations at other protocols, most recently Uniswap, where governance votes turned on whether protocol revenue should flow to token holders rather than treasury reserves. What sets Ethena apart is the conditional trigger. Rather than activating immediately at current scale, the mechanism only switches on at a supply level more than double today’s, which ties holder payouts directly to growth of the synthetic dollar itself.
Why the threshold matters
USDe is a synthetic dollar backed by crypto collateral and offsetting short perpetual positions. Its supply expands when traders deposit assets to mint the token and contracts when they redeem. Growth to $7.5 billion would require sustained demand for the delta-neutral carry trade that generates Ethena’s revenue in the first place.
That creates a feedback loop the Foundation is betting on. More USDe means more revenue, which funds more buybacks, which supports ENA. It also concentrates risk. If funding rates stay compressed for months, the protocol could hit its supply target with little revenue to distribute, leaving holders waiting on a switch that technically flipped but pays out little.
The protocol has grown fast when conditions favored it. Total assets under management across Ethena deployments rose from roughly $5.4 billion in early July to more than $13.8 billion by September of last year, an all-time high at the time, and the current restructuring assumes that appetite returns. The October 5 unlock consolidation will be the first test of whether the plan holds. Consolidated unlocks tend to produce sharper single-day selling pressure than spread-out schedules, though the OTC buyouts are designed to absorb part of that flow before it reaches exchanges.
What holders watch next
Three dates matter from here. October 5 brings the consolidated investor unlock, the first real test of the buyout program’s absorption capacity. October brings the expected in-principle agreement on protocol intellectual property. And somewhere beyond both sits the $7.5 billion supply line, which at current growth rates is a matter of months rather than weeks if the synthetic dollar’s demand returns.
For now, the mechanism sits dormant. The vote is done, the rules are written, and the trigger sits at $7.5 billion of USDe in circulation, roughly $3.4 billion away. Whether that distance closes in a favorable funding environment or an unfavorable one will decide what the fee switch is actually worth when it flips.