How It Works
Users deposit stETH, ETH, or BTC into Ethena, which simultaneously opens short perpetual futures positions of equal size on partner exchanges (Binance, Bybit, OKX, Deribit). The long spot + short perp combination creates a delta-neutral position — price moves in the underlying asset cancel out. When perpetual funding rates are positive (longs pay shorts, which is typical in bull markets), Ethena collects funding payments. This funding income is passed to sUSDe stakers. In negative funding environments, Ethena draws from a reserve fund to maintain stability. The peg is enforced by arbitrageurs who mint USDe when it trades above $1 and redeem when below.
Backing Type: Synthetic
Synthetic stablecoins use derivative strategies — typically delta-neutral positions combining spot holdings and short futures — to maintain their peg without holding traditional reserves. Yield is generated from the funding rate differential.