Overview
USDe is a synthetic dollar created by Ethena, a project founded by Guy Young and launched in February 2024. It aims to stay worth $1, but unlike USDT or USDC it is not backed by dollars in a bank.
USDe grew extremely fast: its supply passed $14 billion in 2025, making it the third-largest dollar token at the time. By October 2026, it had about $4.5 billion in circulation.
How it works
Ethena holds crypto assets such as bitcoin, ether and SOL, and at the same time opens short positions of the same size on futures exchanges. If crypto prices go up or down, the gains on one side offset the losses on the other: this is called being delta-neutral. The result is a position worth a stable number of dollars.
Futures traders who are “long” usually pay a fee to those who are “short”, called the funding rate. Ethena collects it, plus staking rewards on ETH. Users who stake USDe get sUSDe, which earns this yield, around 11% a year in strong markets and around 5% in 2025 on average.
To reduce risk, Ethena also holds stablecoins and tokenized Treasuries, including its own USDtb.
The October 2025 crash
On 10 October 2025, a record crypto crash triggered billions in liquidations. USDe dipped only slightly on most markets, around $0.97, and recovered within hours. On Binance, however, USDe briefly showed prices far below $1 because of the exchange’s internal pricing, causing liquidations of users who had borrowed against it. Binance later compensated affected users. The episode raised questions about how venues price synthetic dollars.
The USDe token
| USDe at a glance | |
|---|---|
| In circulation (Oct 2026) | about $4.5 billion |
| Target value | $1.00 |
| Peak supply | over $14 billion (2025) |
| Market cap | about $4.5 billion |
Ethena’s governance token, ENA, is reviewed separately. A proposed “fee switch” would send most protocol revenue to ENA buybacks once USDe supply reaches $7.5 billion.
Risks
- Negative funding. In bear markets, funding rates can turn negative, so Ethena pays instead of earning. A reserve fund is meant to cover this, but a long period could strain it.
- Exchange and custody risk. Positions sit on exchanges and with custodians; a failure could cause losses.
- Not regulated as a stablecoin. In 2025, Germany’s regulator BaFin found problems with Ethena’s German entity, which wound down its operations there.
- Liquidity. In a panic, many holders could try to redeem at once.
USDe vs. the competition
| USDe | USDT | USDC | |
|---|---|---|---|
| Backing | Crypto + short futures, stablecoins | T-bills, BTC, gold, loans | Cash, T-bills |
| Built-in yield | Yes (sUSDe) | No | No |
| Regulated stablecoin | No | Partly (USAT) | Yes (US, EU) |
| Main risk | Funding rates, exchanges | Reserves, transparency | Bank risk |
Our verdict
USDe is one of DeFi’s most important innovations: a dollar token that pays yield from crypto markets, used across lending and trading apps. It got through the October 2025 crash largely intact.
But it is not the same as a cash-backed stablecoin: its yield depends on market conditions and its safety on exchanges and custodians. Treat USDe and sUSDe as higher-risk yield products, not as cash. Only put in what you can afford to lose.
This review is for information only and is not financial advice.