Synthetic Dollar Token USDe Relies on Derivatives Trading for Price Stability
USDe is a synthetic dollar token designed to track the US dollar price. Unlike other stablecoins like USDC or USDT, which hold bank deposits and short-dated government bonds as their core backing, USDe relies on a hedging trade for its price stability.
The mechanism behind USDe's yield comes from the funding rate in perpetual futures markets. The token holds a large position in derivatives, matched by an equally large opposing position. This creates a delta-neutral position that earns income from the funding rate, which is essentially a settlement payment between long and short positions.
According to BaFin's 2025 order, Ethena GmbH was instructed to freeze its asset reserve through custodians, restrict managing directors' power of disposal, close new business with customers, and appoint a special commissioner to monitor compliance. The regulator found serious deficiencies in the company's operations, including selling sUSDe tokens without a required securities prospectus.
As long as more capital is betting on rising prices than falling ones, the short side collects the funding rate payment, making the returns on such constructions gush during upward phases and dry up in quiet markets. However, when sentiment flips, the direction of payment reverses, turning the model's source of income into a cost item.