What is USDe?
Ethena USDe (USDe) is a synthetic stablecoin pegged to the U.S. dollar that combines crypto-based yield generation with decentralized stability methods. It’s designed to work independently of traditional banks and financial systems.
- Decentralized Stability – Keeps its $1 value by using a strategy called delta hedging, which balances crypto derivatives against the collateral backing it.
- Yield Engine – Offers returns through staking rewards and trading derivatives, marketed as an “Internet Bond.”
- Regulatory Agility – Operates outside U.S. rules that limit yields on stablecoins, attracting investors looking for better returns.
Deep Dive
1. Stability Through Derivatives
USDe maintains its $1 peg using a delta-neutral approach. When users create USDe by depositing assets like ETH or other stablecoins, the system takes an opposite position in crypto futures markets to offset price changes. This means the coin is backed by more than 100% collateral (101.38% as of September 2025) without relying on traditional cash reserves. The protocol also provides weekly proof-of-reserves and undergoes custodian audits to ensure transparency (Ethena.fi).
2. Yield via the “Internet Bond”
Holders of staked USDe (called sUSDe) earn income from two main sources:
- Staking Rewards: Earnings from assets like ETH that are staked in liquid staking protocols.
- Funding Rates: Profits from holding short positions in perpetual futures, which tend to pay positive returns when markets are bullish.
Together, these income streams produced an average annual percentage yield (APY) of 19% in 2024 (Ethena Docs).
3. Regulatory Tailwinds
In July 2025, the U.S. GENIUS Act banned regulated stablecoins from offering yields, pushing investors toward decentralized options like USDe. Because USDe is synthetic and not classified as a security, it can continue to distribute yields legally. Following this regulation, USDe’s supply grew by 75% in just one month, reaching $12 billion by September 2025 (CobakOfficial).
Conclusion
USDe offers a new take on stablecoins by combining yield generation with decentralized crypto strategies, taking advantage of regulatory gaps and the flexibility of decentralized finance (DeFi). While its rapid growth shows strong demand for alternative stable assets, the key question remains: can its delta-hedging approach maintain both scalability and price stability during volatile market conditions?