Will Ethena expand its USDe collateral beyond crypto amid ‘poor positioning’?
USDe's market supply has decreased from over $14 billion to below $6 billion amid relatively unattractive yield.
Ethena [ENA] plans to diversify its USDe reserve assets into non-crypto assets to boost its falling yield and poor market performance.
According to Gary Young, the Ethena founder, the protocol has been “poorly positioned” since the October crash as crypto winter compressed yields and triggered volatility. Going forward, Young added, the USDe reserve will have access to:
Basis on non-crypto assets, including commodities and equities, institutional triparty collateralized lending via Coinbase, Kraken, Anchorage, and prime lending across CeFi/ HyperliquidX and liquid high-quality non-TBill RWA exposures.
For the unfamiliar, basis refers to the spread or profit between a spot price and its derivatives. So far, Ethena has been generating yield from staking rewards and capturing basis across Bitcoin [BTC], Ethereum [ETH], and Solana [SOL].
Ethena’s USDe lags rivals as yield crashes
But the ongoing market rout has derailed Ethena’s crypto-native strategy. In late 2024 and early 2025, USDe yield hovered around 10% and 22%.
At that time, USDe’s interest rate was five times more lucrative than the T-Bill’s yield of 4%. Additionally, it was more than twice Sky’s (formerly MakerDAO) sUSDS rate of 9%. In other words, it’s a relatively high yield that attracted risk-averse investors effortlessly during the bull run.
But the yield collapsed in 2025.
Market fear intensified following the October crash, which was partly triggered by the USDe depegging on the Binance platform. It affected the crypto yield segment.
As of April 2026, USDe’s weekly average yield has fallen to 3.54%. Interestingly, the T-Bill rate is also at 3.54% but has no inherent risks associated with USDe reserve assets. In other words, you’re better off parking your money in T-Bills than in relatively risky USDe if they offer the same rewards.
The results?
Over $9 billion was redeemed from USDe in late 2025. Apart from a slight bounce in January 2026, the synthetic stablecoin has seen consecutive monthly outflows. This has slashed its market cap from $14.8 billion to $5.8 billion: a 2.5x decline.
From this backdrop, Ethena’s move aims to shake off the reliance on crypto market cycles. For Young, the diversification should have been done a long time ago, adding that,
Each of the above (new reserve assets, income streams) represents multi-billion capacity opportunities with that will now sit alongside the existing USDe collateral base to improve the product resilience through the cycle.
While some experts supported the move, others still viewed USDe as a risky bet.
Final Summary
- Ethena wants to expand reserve assets to commodities, equities, and new institutional lending to improve USDe’s declining yield rates and recent underperformance
- USDe supply has declined by 2.5x to below $6 million amid low demand as crypto rout intensifies
