The Ethena Foundation overhauled ENA's token economics on Thursday, ending monthly VC unlocks and buying out locked tokens from investors who had been selling. ENA holders are now voting on a fee switch that would send most protocol revenue toward token buybacks, while a separate framework would keep the protocol's economic upside with the foundation rather than Ethena Labs shareholders.
ENA climbed 23% over the past 24 hours to $0.17 on Thursday after the Ethena Foundation announced a package of changes to the token's economics. The token has doubled in price in a bit more than a week as the broader crypto rally heated up.
The overhaul targets two problems that have weighed on ENA: selling pressure from early-investor unlocks and uncertainty over how much of Ethena's economic value flows to the token itself.
Ending investor unlock overhang
The foundation said it bought the remaining locked tokens from certain large seed investors that had sold ENA over the past nine months, completing the purchases through over-the-counter transactions during the past two weeks. Investors who had not sold were offered the same buyout at their original purchase price, but none accepted.
Ethena Foundation and lead investors also agreed to release all remaining original investor tokens at once, beginning Oct. 5, rather than continue with monthly unlocks. Team tokens stay under their existing vesting schedules, with about 12% of ENA supply remaining locked and unvested after the changes.
Fee switch targets ENA buybacks
ENA holders are voting on a fee switch that would create a recurring source of demand for the token. Once USDe circulation reaches a $7.5 billion threshold, 95% of net revenue from Ethena-branded businesses would go toward programmatic ENA purchases, with the remaining 5% funding growth.
The overhaul follows a sharp reversal for Ethena's stablecoin USDe, whose supply has fallen below $5 billion from a peak near $15 billion in October during the crypto bull market. USDe generates part of its yield from derivatives funding rates, which dwindled as crypto markets cooled.
Protocol value shifts to the foundation
Ethena Labs and the foundation are also formalizing where the protocol's economics reside. Under an agreement in principle, substantially all material intellectual property and economic upside from the Ethena protocol would belong to the foundation and ecosystem rather than Ethena Labs equity holders, with the framework agreement expected to be published in October.
Sources: Ethena Foundation, CoinDesk, The Block
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