Ethena Raises $100M to Expand Institutional Stablecoin Offerings

Ethena Raises $100M to Expand Institutional Stablecoin Offerings

Ethena (ENA-USD), a rapidly growing crypto project whose dollar-pegged token has surged to become one of the largest in its category within a year, has secured $100 million in funding to develop a new institutional-focused stablecoin.

The previously undisclosed fundraising round was completed in December, attracting prominent investors such as Franklin Templeton and F-Prime Capital, the venture capital arm affiliated with Fidelity Investments, according to a source familiar with the matter.

A Growing Ecosystem

Ethena operates two key tokens: ENA, a governance token granting holders a say in the project’s direction, and USDe, a “synthetic dollar” that currently offers a 9% yield to holders. USDe’s circulation has skyrocketed to nearly $6 billion, fueled by the crypto market rally, which at one point enabled yields as high as 60%.

As part of the funding round, a foundation backing the project sold ENA tokens to investors at an average price of just under $0.40 per token. ENA later soared to $1.30 in mid-December, only to plunge nearly 70%, according to CoinGecko data.

Beyond its notable financial backers, Ethena has also established connections within U.S. political circles. World Liberty Financial, a crypto initiative promoted by former U.S. President Donald Trump and his sons, announced in December a strategic partnership with Ethena Labs, the startup behind the project. Trump, a vocal advocate for cryptocurrency, had previously launched his own memecoin just before returning to the White House.

Ethena Labs declined to comment on the token sale. Additional participants in the funding round included major crypto investment firms Dragonfly Capital Partners, Polychain Capital LP, and Pantera Capital Management LP, according to sources. Representatives for these firms, along with F-Prime and Franklin Templeton, either declined to comment or did not respond to requests.

Yield-Generating Model

Unlike traditional stablecoins such as USDT (Tether) and USDC (Circle), which are backed by highly liquid assets like U.S. Treasury bills, USDe is supported by a reserve of digital assets, including other stablecoins.

What sets USDe apart is its yield-generation mechanism. Ethena employs a financial strategy known as the basis trade, which takes advantage of price discrepancies between spot and futures markets. During bullish periods in crypto, funding rates—the interest fees paid by leveraged traders—can be significantly high, translating into lucrative returns for Ethena’s ecosystem.

However, this strategy carries risks in a downturn. If crypto markets experience a sharp correction and funding rates turn negative, Ethena could face challenges. Researchers at CryptoQuant highlighted this risk in an April report, noting that in such conditions, traders in Ethena’s short positions would have to pay fees instead of collecting them. This could strain the reserve fund supporting USDe’s stability.

Institutional Expansion & Future Plans

In January, Ethena Labs founder Guy Young revealed plans to introduce iUSDe, a new version of USDe designed for regulated financial institutions.

Unlike its retail counterpart, iUSDe will include transfer restrictions, allowing traditional financial firms to integrate the stablecoin while maintaining compliance. Young stated that Ethena’s top priority for Q1 is to collaborate with financial distribution partners to facilitate institutional access to iUSDe. The goal is to offer a seamless on-ramp for traditional finance firms to enter the market without directly engaging with crypto infrastructure.

Stablecoins are becoming an essential bridge between crypto and traditional finance, with major institutions like Standard Chartered Plc exploring the space. Meanwhile, Tether’s USDT, the largest stablecoin, is backed by over $140 billion in assets managed partly by Cantor Fitzgerald, whose founder Howard Lutnick serves as Trump’s Commerce Secretary.

Notably, in January, Trump signed an executive order to safeguard the U.S. dollar, explicitly stating his administration’s intent to support the development of “lawful and legitimate” dollar-backed stablecoins worldwide.

Beyond iUSDe, Ethena also plans to use proceeds from its fundraising to develop its own blockchain, a move that could further cement its presence in the rapidly evolving digital asset space.