USDe: Ethena Turns to Wall Street to Boost Returns

The yield from Bitcoin is no longer sufficient for Ethena. The issuer of USDe, a synthetic dollar worth approximately $4 billion, is preparing to enter perpetual contracts backed by stocks. The goal remains the same: to cover a long exposure with a short position and to collect fees paid by traders using leverage. However, the yields currently offered on stocks far exceed those of crypto derivatives.

Key Points {#h-key-points}

• Ethena adds perpetual contracts on stocks to the hedging assets of its synthetic dollar USDe
• This market shows nearly $6 billion in open interest and funding rates of 15 to 20% annualized, three to four times the crypto levels
• The protocol anticipates that perpetuals backed by real-world assets will surpass crypto derivatives in its collateral within 12 to 24 months
• Trading hours, tight liquidity of tokenized stocks, and regulatory ambiguity in the U.S. remain the main friction points

USDe does not function like USDC or USDT, whose units are primarily backed by cash and short-term debt securities. Ethena uses a portfolio of crypto assets and derivative positions designed to limit its exposure to market fluctuations.

In its simplest form, the strategy consists of holding a spot asset while opening an equivalent short position on its perpetual contract. The rise or fall of the underlying asset is then largely offset between the two positions: the portfolio is said to be delta neutral.

The yield comes notably from the funding rate, a periodic fee exchanged between long and short positions. When demand for bullish leverage dominates, traders positioned long pay those who are short.

Ethena can thus earn these revenues on its hedges. However, the USDe itself does not provide any automatic yield: users must convert it to sUSDe to access the rewards generated by the various strategies of the protocol.

The same mechanism could now be applied to stocks. Ethena plans to combine long exposure to stock market-related assets with short positions on the corresponding perpetual contracts.

This market is starting to have sufficient depth. The open positions on equity perps have increased tenfold since March, reaching approximately $6.2 billion. Ethena is expected to announce its first partners and deployments in the coming weeks.

Economic interest is evident in the funding rates. In recent months, perpetual contracts on stocks have offered an average annualized yield of about 14% on Hyperliquid and 17.5% on Binance. Their median reaches 13.9%, compared to only 3.9% for Bitcoin contracts.

Once these markets become sufficiently large, their funding rates have remained positive on 94 to 97% of observed days. Guy Young, co-founder of Ethena, explains this regularity by a naturally bullish bias: in stocks, the demand for long leveraged positions tends to dominate sustainably.

Conversely, the yield from Bitcoin perpetuals has contracted significantly. It is said to have dropped from about 11% in 2024 to 4.9% in 2025, and then to just 2.2% between January and August 2026. This decline has reduced the interest in crypto basis trading and contributed to the contraction of USDe supply, which fell from a peak near $15 billion to around $4 or $5 billion.

Stocks also offer a potentially much larger market. Their global market capitalization reached about $166.5 trillion in July, compared to nearly $2.2 trillion for all cryptocurrencies. Stock perpetuals still represent only a fraction, but their growth could allow Ethena to diversify its sources of yield.

However, the strategy carries new risks: limited liquidity, discrepancies between the contract price and the stock price, closure of stock markets while perpetuals continue to trade, management of dividends, and regulatory uncertainties. A positive funding rate can also turn around.

Nevertheless, Ethena believes that perpetuals linked to real-world assets could surpass crypto derivatives in its hedging framework within 12 to 24 months. The USDe would then rely less on leverage from Bitcoin and more on that used in major stocks. TradFi should be worried...

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