Article author: ArkStream Capital
We are pleased to announce that ArkStream Capital has invested an additional $10 million in Ethena in August 2025, reinforcing our long-term layout from the first round investment of $5 million in December 2024. This increase comes from our high recognition of Ethena’s simultaneous structured breakthroughs in both product and capital markets.
What we are firmly increasing is not only the explosive growth in data but also Ethena's institutional innovation in the capital markets.
The flywheel of 'Coin-Stock Dual Track'
In the past two years, Ethena has not only proven the product-market fit (PMF) of USDe but is also bundling a purely crypto-native decentralized protocol with a US stock-configurable capital vehicle as the flywheel of 'Coin-Stock Dual Track', completing what we call a crucial leap to Capital-Market Fit (CMF). This is not for short-term arbitrage, but to connect the protocol's cash flow, governance, and external compliant capital into a reusable capital structure.
Equity side (StablecoinX): Based on the merger with TLGY SPAC, the PIPE scale has been increased from $360 million to a cumulative $895 million (the latest round added $530 million), planning to list on Nasdaq as 'USDE'. After the delivery, StablecoinX's balance sheet will hold over 3 billion ENA. This round of funding will be used to purchase locked ENA from Ethena Foundation subsidiaries; at the same time, the foundation's subsidiaries will commission third-party market makers to execute approximately $310 million in spot buybacks in the open market over the next 6–8 weeks, with the pace being: $5 million daily when ENA > $0.70; $10 million daily when ENA < $0.70 or drops more than 5% in a single day. It is expected to account for a total of 13% of the circulating supply, with the previous first round PIPE having purchased about 7.3%. Additionally, the Ethena Foundation retains veto power over the sale of StablecoinX. This locks the demand side of equity financing and on-chain governance assets together, forming an institutional channel of 'compliance capital → governance token demand'.
Token side (ENA): USDe's scale has surged to $12 billion, ranking third among stablecoins, with the protocol's historical income exceeding $500 million. Aave's risk exposure to USDe-related assets once reached approximately $4.7 billion; discussions on the sENA fee switch are accelerating: Ethena's risk committee has set clear activation indicators (USDe circulation, cumulative protocol income, CEX coverage). With USDe's listing on Binance, the final key condition has also been met, and the protocol is now able to initiate the mechanism to allocate part of its income to sENA. This means that the valve for token capturing cash flow is entering a substantive opening phase, and ENA's value support will shift from purely relying on growth expectations to directly anchoring protocol cash flow.
External signals (DAT reserves): Mega Matrix (NYSE: MPU) has announced that ENA will be the primary strategic reserve for DAT, equivalent to using the balance sheet of a listed company to provide 'long-term buying' for the protocol. At the same time, Mega Matrix submitted a $2 billion shelf registration to the SEC, reserving space for flexible financing in batches over the next few years. This means that it not only locks ENA on the asset allocation side but also leaves an upper limit for 'continuously increasing positions' or related capital operations on the financing instrument level, providing external institutional support for ENA's long-term demand side.
Unlike the arbitrage model of 'direct shell buying + PIPE + ATM', such a three-point design forms a closed loop:
Equity financing → ENA demand/buyback → USDe expansion → protocol cash flow growth (supporting valuation and refinancing) → DAT/institutional allocation → external structural buying → flowing back to both token and stock levels, ultimately benefiting both token holders and shareholders.
This is the first time a DeFi protocol has entered the U.S. stock market through structured financial instruments. Ethena is spilling 'protocol growth' into 'institutional demand', making ENA's value capture more capital elastic across cycles, which is also one of the core reasons for our continued heavy investment.
USDe: The new benchmark interest rate of DeFi
USDe drives returns with a crypto-native delta-neutral mechanism, gradually being regarded by the market as the new benchmark interest rate for DeFi funds and an anchor for 'quasi-risk-free assets':
Supply volume: As of the end of August, it has surpassed $12.5 billion, ranking as the third largest stablecoin;
Leading lending exposure: Aave's risk exposure to Ethena-related assets reaches $4.7 billion, showing its primary liquidity position in the mainstream DeFi credit market.
Cross-chain scale: Cumulative transaction volume exceeds $5.7 billion;
Yield range: Providing approximately 9–11% annualized yield through delta-neutral strategies, regarded as DeFi's 'risk-free rate'.
Protocol income: Cumulative income exceeds $500 million, with the highest weekly income in August 25 reaching $13.4 million.
When USDe is more widely used as collateral and settlement assets, the triad of scale—liquidity—yield will further strengthen the governance and distribution value of ENA (including potential value recovery from mechanisms like fee-switch).
The 'backhand' after stablecoins: expanding from yield dollars to the wings of the settlement and capital layers
Stablecoins are not the destination, but the foundation of cash flow and distribution. Ethena's 'backhand' is reflected in the collaborative expansion of distribution and settlement:
Distribution layer: let 'yield dollars' reach institutions and billion-level users
iUSDe (institutional version): By using a transfer-restricted contract form, the yield nature of sUSDe is packaged for compliance and connected to the TradFi distribution network, reducing operational and compliance friction for institutions.
tsUSDe (Telegram/TON): In-depth cooperation with TON integrates sUSDe natively into the Telegram wallet ecosystem, targeting billion-level terminals, making dollar yields an instantly distributable internet-native asset.
Why it matters: The 'light compliance + platform-level entry' on the distribution side can thicken the positive feedback of 'USDe scale → lending exposure → protocol income'; Aave's $4.7 billion related risk position has already validated this backbone.
Settlement layer: Converge turns USDe into native gas/settlement assets
Converge chain: co-built with Securitize, Arbitrum + Celestia modular combination, supporting USDe / USDtb as gas and settlement assets, and enhancing security through ENA staking, compatible with both permissioned and non-permissioned applications.
Why it matters: When 'yield dollars' become the basic settlement fuel, the network effect of USDe rises from financial vernacular to transaction routing/accounting unit; this allows Ethena to undertake high-value-added businesses after stablecoins such as RWA issuance, institutional settlement, and market-making collateral.
Our judgment: This combination of 'institutional compliance entry + super distribution front-end + dedicated settlement chain' significantly enhances USDe's accessibility and usability, bringing continuous cash flow spillover across scenarios and customer groups for ENA.
Risk and moat: mechanism transparency + structural decentralization
Our increase in holdings of Ethena is also based on our examination of its risk governance and mechanism transparency:
Transactional risk: USDe essentially relies on the basis/funding framework of 'multiple spot/short perpetual', and extreme market conditions may compress returns or cause temporary inversions. Ethena mitigates such risks through multiple exchanges, decentralized counterparties, and dynamic hedging parameters.
Systemic spillover: As USDe becomes a leading collateral asset, the risk governance of major lending protocols (increasing risk weight, governance parameters) is also following suit.
ArkStream's investment logic
From short-term to long-term, Ethena's investment logic is very clear:
Short-term (tactical level): USDe has grown into DeFi's largest yield fund reservoir. Its $12.5 billion circulation scale and $4.7 billion risk exposure on Aave give it the status of a 'primary collateral asset' in the DeFi lending market. At the same time, USDe's 9–11% annualized yield has been regarded by the market as a quasi 'risk-free rate', becoming the core anchor for liquidity aggregation. The logic at this stage is: the continuous strengthening of scale and yield makes USDe a financial hub for the entire ecosystem, providing stable accumulation for protocol cash flow.
Mid-term (structural level): Ethena has completed the coupling with traditional markets in its capital structure. Through SPAC → PIPE → De-SPAC, USDe/ENA is bound into the U.S. stock compliance framework; StablecoinX establishes institutional channels for governance token demand through a cumulative $895 million PIPE and 3 billion ENA balance sheet; at the same time, Mega Matrix's DAT reserves and $2 billion shelf registration further institutionalize external capital buying. The logic at this stage is: through structured financial instruments, lock the demand side of equity financing and token demand together, creating an institutional channel of 'compliance capital → governance token demand'.
Long-term (paradigm level): The most critical turning point comes from the official landing of the sENA fee switch. The three activation indicators set by the risk committee (USDe circulation, cumulative income, CEX coverage) are now fully met, especially after USDe listed on Binance, completing the final coverage condition. This means Ethena now meets the conditions to directly allocate part of the protocol income to sENA. From now on, ENA will shift from 'growth narrative-driven' to 'cash flow-driven', becoming the first stablecoin governance token capable of directly capturing the protocol's real cash flow. Combined with the external long-term buying brought by DAT reserves, ENA's value support will show a dual drive of 'endogenous cash flow distribution + external structured allocation'. We judge that under this framework, ENA is expected to evolve into a 'quasi-gold reserve' asset for stablecoin governance, achieving a cross-cycle positive loop of protocol cash flow and capital markets.
Conclusion
In ArkStream's view, Ethena is not just a stablecoin protocol, but a connection layer between crypto-native returns and traditional capital markets. When the product sets the correct 'base interest rate' and the capital structure provides a 'systemic gateway' towards U.S. stocks, the value capture of ENA possesses cross-cycle extensibility. Our decision to add investment at this time supports Ethena's decisive step from PMF to CMF.
