Ethena Taps Equity Perpetuals for Yield as Crypto Markets Cool

Ethena, the protocol behind the $4 billion 'synthetic dollar' USDe, is shifting its focus beyond crypto markets. Instead of relying on volatile cryptocurrency prices, Ethena plans to tap into the booming equity perpetual futures market. This move comes as the protocol looks for new sources of yield after USDe supply fell below $5 billion from a peak near $15 billion.

The expansion targets equity perpetual futures with funding rates averaging 14% on Hyperliquid and 17.5% on Binance, significantly higher than the low single-digit returns seen in Bitcoin over the same period. Ethena expects to announce its first exchange partners and deployments for the equity strategy in the coming weeks.

The protocol's co-founder, Guy Young, emphasized that the opportunity is larger outside of crypto, with global equities valued at around $166.5 trillion compared to roughly $2.2 trillion for crypto. Ethena aims to expand its basis-trading strategy into equity perpetual futures, which have seen their open interest balloon to $6.2 billion from less than $1 billion in March.

Ethena also announced a $1 billion FalconX facility that can put USDe backing into overcollateralized institutional loans. The expansion is expected to lead to real-world asset perpetuals overtaking crypto derivatives in USDe backing within 12 to 24 months.