Ethena's synthetic stablecoin USDe has skyrocketed to become the world's third-largest stablecoin with a market capitalization exceeding $9.3 billion as of early August 2025. This represents a 75% surge from its $5.33 billion valuation just three weeks prior on July 17, overtaking rivals like FDUSD and DAI.
The growth stems from USDe's unique delta-neutral mechanism: it maintains dollar parity through long spot positions in assets like BTC, ETH, or SOL combined with offsetting perpetual short positions, passing funding yields to sUSDe stakers. This crypto-native model attracted over $3.1 billion in new mints within 30 days, fueled by positive perpetual futures funding rates and ENA token buyback programs.
Despite its ascent behind only USDT ($164B) and USDC ($64B), concerns linger about sustainability. Annualized yields have plunged from over 60% to below 5% as capital floods the strategy. Founder Guy Young acknowledged "funding risk" sensitivity to market shifts, while historical parallels to UST's collapse underscore vulnerability. Reflexivity also emerges—Young noted each $1 USDe growth creates ~$0.70 USDT demand, potentially strengthening incumbents.
Ethena's governance token ENA rallied 15% post-announcement but faces near-term pressure from a $100M+ token unlock. Regulatory developments like the proposed GENIUS Act could further shape USDe's trajectory as it projects potential USDC overtake by 2027 with sustained 8.4% monthly growth.