Ethena First Unlocks of 2.07 Billion $ENA

Ethena, a stablecoin protocol built on Ethereum with synthetic dollar USDe, will open their first major native token unlock of 2.07 billion $ENA today.

What is Ethena ($ENA)?

Ethena ($ENA) is a decentralized stablecoin protocol backed by Ethereum derivatives that offers a secure and scalable solution through its synthetic dollar, USDe. Ethena aimed to create a reliable alternative to traditional stablecoins like USDT and USDC, which depend heavily on banks or other real-world finance institutions. 

In a short time, USDe’s market capitalization surged to $6 billion, surpassed DAI and became the third-largest stablecoin (Source: Cointelegraph). Some key factors drive Ethena’s rapid growth:

• Instead of relying on bonds, Ethena synthesizes USDe by using stETH and BTC to open short positions on futures. Meanwhile, USDe maintains a 1:1 peg with the USD through delta hedging. Delta Hedging is a technique used to generate income in sideways markets. In simple terms, delta hedging ensures that a trader’s position remains stable despite market movements. When applied to the crypto market, the most common approach involves balancing a portfolio to maintain a net-zero position, effectively acting as a hedge. This allows investors to minimize risk while earning profits through alternative methods such as IDO, airdrop, staking, farming, and more.
• Successfully raised $100 million in fundraising from major investment funds, including Franklin Templeton, F-Prime Capital, Dragonfly Capital, Polychain Capital, and Pantera Capital to help Ethena expand the adoption of its stablecoin USDe.

And with that, it takes a short time for $ENA, Ethena’s governance token, to raise market capitalization from $400 million to $1.5 billion. Ethena operates through a decentralized autonomous organization (DAO), where the community makes key decisions. ENA token holders can vote to improve the system, adjust parameters, and introduce new features. This governance model keeps the project transparent and aligned with community interests, ensuring continuous innovation and adaptation. 

Today, on March 5, a major $ENA token unlock is happening. Ethena will release 2.07 billion ENA tokens, which account for 39% of the circulating supply and are valued at over $765 million. This event represents the first significant unlock for core contributors and investors, marking a crucial moment in the project’s supply expansion and market distribution.

The unlocked tokens will be allocated as follows:

• Core Contributors – 1.13 billion ENA (worth $471 million)
• Investors – 937.5 million ENA (worth $392 million)
• Ecosystem Development – 7.93 million ENA (worth $3.32 million)

This unlock will increase liquidity, reshape token distribution, and could have a major impact on market dynamics. As the supply expands, all eyes will be on how the market reacts to this significant event.

However, this event could pressure the price downward due to increased supply and potential sell-off by core contributors and investors. To guard against a sudden price drop, investors should monitor market demand, news, and community sentiment. Besides, using risk management strategies like stop-losses and position sizing is necessary. This event may offer a long-term buying opportunity but carries short-term volatility risks.