Generalized Restaking within the Ethena Ecosystem and Upcoming Ethena Chain

Today marks an important step forward in more closely aligning the growth and use of USDe with $ENA. Ethena will begin to gradually introduce more functional utility for $ENA within the Ethena ecosystem, starting with the launch of a generalized staking capability for $ENA.

Summary:

i) Current use cases for $ENA within the Ethena ecosystem

ii) Introduction of generalized restaking for $ENA and $USDe

iii) Potential rewards for $ENA restaking pools within Symbiotic

iv) Immediate reduction in go-forward $ENA inflation with locking requirements for users with unvested ENA from Season 1

i) Current Use Cases for $ENA:

At present, $ENA can be utilized in the following ways:

i) Locked within Ethena to boost potential future rewards. This is intended to incentivize value transfer to users who are more aligned to the long term growth of Ethena from more mercenary pools of capital. The size of this reallocation scales linearly with the amount of USDe the user holds. Therefore, as USDe supply grows the underlying implied $ENA holding requirements imposed on longer-term aligned ecosystem members scales with this growth. At present, the Locked ENA pools hold ~290m ENA.

ii) Locked within Pendle Finance PT-ENA where users can receive a fixed APY currently at ~75% in the form of PT-ENA, and YT-ENA buyers can receive the points distribution as well as being able to meet minimum ENA holdings relative to their USDe holdings by just holding 1 YT = 1 ENA. At present, the PT-ENA pools hold ~160m ENA.

iii) The next phase of incorporating $ENA into the Ethena system and adding utility will leverage generalized restaking pools for staked $ENA. The first use case is to provide economic security for cross-chain transfers of USDe relying on the LayerZero DVN based messaging system. This is the first of multiple layers of infrastructure related to the upcoming Ethena Chain and financial applications built upon the chain which will utilize and benefit from restaked $ENA modules.

Further details on the chain can be found in the Ethena 2024 roadmap post detailed here.

Staked $ENA and $sUSDe will be the first newly available assets to deposit in Symbiotic in the upcoming epoch with the initial LST caps all already filled within a hours.

A Dune Dashboard on locked $ENA has been created here:

ii) Details on the $ENA Restaking Modules:

Ethena will initially pilot the use of a generalized restaking framework with Symbiotic and LayerZero, seeking to secure the cross-chain transfer of Ethena-based assets including $USDe and $sUSDe. These transfers are verified through a LayerZero DVN network that is secured via staked $ENA within Symbiotic.

This module will also include building a generalized framework to launch restaked DVNs for LayerZero ecosystem partners that make use of aligned tokens to provide economic security and DVN operator selection.

Further details on LayerZero DVNs can be found in their documentation here.

While Ethena based cross-chain transfers will be secured via staked $ENA, Ethena will be providing a unique value proposition to generalized restaking use cases via $USDe and $sUSDe for other systems and protocols to leverage as the underlying asset.

$USDe/$sUSDe provide two distinct qualities as assets which unlock unique potential use cases compared to leveraging $ETH as the underlying restaked asset:

i) Uncorrelated: a dollar-”pegged” relatively stable asset is typically uncorrelated to volatile crypto assets, and during periods where slashing needs to occur the stability of USD relative to ETH is an important quality during moments of stress - when you need the restaked security most.

ii) Sustainable Real Return: it is currently unclear how AVSs will be able to provide a real non-inflationary yield for billions of dollars in restaked capital without excessive token rewards forming the majority of the yield. Using $sUSDe, which has produced a structurally higher real yield than any dollar-based asset since inception, uniquely solves this problem by reducing the need for inflationary rewards to bridge the gap in cost of capital between restakers and systems than consume security.

iii) $ENA Symbiotic Staking Reward Details:

$ENA and $sUSDe will be the next eligible assets to stake in their next epoch following the ETH LST cap being filled within a matter of days.

Staked $ENA in Symbiotic will receive the following rewards:

• The highest Ethena multiplier at 30x per ENA per day

• Symbiotic points

• Mellow points

• Future potential LayerZero RFP allocations (if allocated to Ethena)

The $ENA pools will be live on Wednesday 26th of June.

Restaked $ENA within the Ethena Chain:

As detailed in the 2024 roadmap the Ethena Chain will be focused on building financial applications and infrastructure upon $USDe as the gas token and fulcrum asset within the system.

Our view is that crypto-native money is the holy grail and killer application, while dollars are the lifeblood of every financial application.

Restaked $ENA will provide generalized security across each of these use cases for applications such as:

• Spot AMMs

• Perpetual DEXs

• Yield Trading

• Money Markets

• Undercollateralized Lending

• Onchain Prime Brokers

• Option and Structured Products

As well as infrastructure solutions on the chain such as:

• Cross-Chain Transfers

• Oracle Providers

• Shared Sequencers

• Data Availability Solutions

And in return may be eligible to benefit from potential future airdrops for these protocols at a later date at their discretion.

As the ecosystem and use cases grow around USDe the asset, the utility of $ENA will grow as the asset that helps secure the ecosystem.

iv) Update on $ENA Locks and Vesting:

Effective from 17th of June, any user receiving $ENA via airdrop (e.g, from the portion of Shard Campaign airdrop subject to vesting conditions) will be required to lock a minimum of 50% of the claimable $ENA from the distribution received in one of the three options outlined in the first section.

Failing to do so will result in all of the user’s unvested $ENA attributed to the relevant wallet being redistributed to other users who lock $ENA in either i) Ethena locking, ii) PT-ENA on Pendle (any chain), or iii) Symbiotic Restaking. As additional use cases for $ENA are made available in the ecosystem, the options for locking $ENA for this purpose may expand as well.

To be clear: the intent of the above is to incentivize a realignment of $ENA holders from mercenary capital to long term aligned users.

Instructions on the above will be made clear when users claim their next weekly ENA vest on the 23rd of June. A minimum of 50% of newly vested ENA will need to be locked in the above options from that point on, otherwise users will lose their unvested ENA.

None of the $ENA which is forfeited as a result of not meeting the conditions above will be retained by the foundation, team or investors - it is solely to benefit users aligned with the ecosystem.

Document Links:

Ethena Labs: https://ethena-labs.gitbook.io/ethena-labs/

Symbiotic: https://docs.symbiotic.fi

LazyerZero DVNs: https://medium.com/layerzero-official/introducing-layerzero-v2-076a9b3cb029