Ethena
About
Ethena is a synthetic dollar protocol built on Ethereum that provides a crypto-native solution for money through its USDe stablecoin and a globally accessible dollar savings asset via sUSDe. The protocol uses delta-hedging with derivatives to maintain peg stability while generating yield from multiple exogenous sources. It targets users seeking dollar-denominated savings technology with crypto-native backing and composability across CeFi and DeFi.
Where Does Yield Come From?
When you stake USDe (Ethena's synthetic dollar), you receive sUSDe. Your sUSDe automatically earns rewards from the protocol's income.
The protocol earns that income from three main sources:
1. Staking Ethereum
The protocol holds Ethereum that is staked to help secure the network. This earns regular rewards: new ETH created (inflation), transaction fees, and extra earnings from block‑ordering opportunities (often called MEV).
2. Hedging with perpetual futures
To keep USDe's value stable, the protocol uses financial contracts called perpetual futures. It takes positions that earn a regular payment known as a “funding rate.” Historically, traders who want to bet on rising crypto prices pay this rate, creating a steady income stream.
3. Rewards on traditional stablecoins
Part of the backing is held in stablecoins like USDC. Those stablecoins earn loyalty or interest rewards from the platforms that custody them (for example, Coinbase’s loyalty programs).
The protocol constantly mixes its backing assets among spot cryptocurrencies (like Bitcoin and Ethereum), traditional stablecoins, and those hedged futures positions. The hedging is designed to keep the overall exposure neutral to price swings while still capturing the funding‑rate income.
All of this revenue comes from outside the protocol—it depends on the maturity of crypto markets—and is distributed to sUSDe holders.
Audits
| Audit / Date | Findings | Verdict |
|---|---|---|
Zellic26-06-2023 - 03-07-2023 |
| The audit revealed no critical vulnerabilities, with only one medium and one low-severity issue that were promptly addressed, indicating a relatively secure codebase at the time of assessment. |
Quantstamp20-09-2023 - 28-09-2023 |
| The audit identified four medium-severity issues, all related to centralization and trust assumptions, with the majority of findings fixed before deployment. The codebase is well-written but requires users to trust Ethena Labs for managing underlying collateral and liquidity. |
Cantina16-10-2023 - 20-10-2023 |
| The audit found only low-risk and informational issues, all of which were promptly fixed, indicating a robust security posture for the Ethena USDe protocol at the time of review. |
pashov21-10-2023 |
| The audit uncovered only low-severity issues, with half fixed and half acknowledged as acceptable design or legal compliance trade-offs, reflecting a relatively secure but highly centralized protocol. |
Code4rena24-10-2023 - 30-10-2023 |
| The audit uncovered four medium-risk vulnerabilities but no critical or high-severity flaws, indicating a reasonable security posture for the protocol. The team acknowledged all findings and should address the medium issues before production deployment. |
Pashov Audit Group19-12-2023 - 22-12-2023 |
| The audit found only a low-severity issue related to cooldown management, indicating a relatively clean security posture for the reviewed staking and token contracts. |
Pashov Audit Group20-05-2024 - 23-05-2024 |
| The audit identified one medium and two low severity issues, primarily concerning order deduplication and configuration validation, which were addressed before deployment. No critical or high risks were found, indicating a relatively secure implementation. |
Chaos Labs01-11-2023 |
| The analysis identifies manageable liquidity risks for Ethena's LST collateral under normal conditions, with stressed scenarios showing potential temporary depegs but strong mean reversion dynamics; protocol solvency appears robust given current liquidity buffers and hedging practices. |
Chaos Labs01-10-2023 |
| This is a market risk assessment, not a security audit; it concludes that Ethena's perpetual futures hedging strategy is feasible with manageable funding rate and slippage risks, provided an adequately sized insurance fund is maintained. |
Chaos Labs01-10-2023 |
| This liquidity assessment provides operational guidance for USDe's secondary market stability but does not evaluate security vulnerabilities; protocol safety regarding smart contract risks would require a separate security audit. |
Pashov Audit Group31-08-2024 - 02-09-2024 |
| Only low-severity findings were reported, with some already resolved, indicating the StakedENA contracts are relatively safe but could benefit from minor improvements in administrative and user-experience areas. |
Quantstamp23-10-2024 - 25-10-2024 |
| The audit found no high or medium severity issues, with only low and informational findings acknowledged by the team, indicating a well-written codebase that follows security best practices. |
Cyfrin23-10-2024 - 01-11-2024 |
| The audit revealed no critical or high-severity vulnerabilities, with only low-risk and informational issues identified, some of which were already resolved. The overall security posture appears solid, though centralization considerations remain as noted. |
Pashov Audit Group17-10-2024 - 20-10-2024 |
| The review identified only low-severity issues, all of which were resolved or acknowledged, indicating a relatively secure implementation with no critical vulnerabilities. |
Legal
Legal form
Limited company (BVI)
Registration jurisdiction
British Virgin Islands (Registration number 2127704, Craigmuir Chambers, PO Box 71, Road Town, Tortola, VG1110, BVI)
Status and notes
Operating entity is Ethena (BVI) Limited, with affiliate Ethena Italia S.r.l. holding VASP registration in Italy. Terms of Service, Privacy Policy, and General Risk Disclosures are published in documentation. sUSDe acquisition not offered to persons with habitual residence or registered office in the European Union or European Economic Area.