Synthetic Dollar Token USDe's Yield Comes from Derivatives Markets, Not Deposited Dollars

The synthetic dollar token USDe generates its yield from a trading position in derivatives markets, not from interest on deposited dollars. According to BaFin's consumer notice of March 21, 2025, Ethena GmbH holds exclusively other crypto assets as its asset reserve and ensures price stability via an algorithm with the help of hedging derivatives.

The market capitalization of USDe is $4.063 billion at a price of $0.9997 (or 0.85497 euros) on August 21, 2026. This is significantly smaller than that of USDT ($183.04 billion) and USDC ($72.80 billion). The yield comes from the funding rate, which is essentially the running settlement payment between long and short positions in the market for perpetual futures.

However, when sentiment in the derivatives market flips, the direction of payment reverses, making it a cost item instead of an income source. This can lead to two further burdens: default risk on the derivatives exchanges and illiquidity risks due to widening spreads between bid and ask prices.