Ethena USDe yields: Source analysis and the impact of BaFin liquidation on you

Let's give a short answer first: USDe's earnings come from trading positions in the derivatives market, not interest deposited in dollars.

The token holds crypto assets behind it while holding an equal amount of reverse position in the perpetual contract market. The remaining income is essentially a funding rate, which is a payment settled regularly between long and short positions in the market. In addition, there is an answer that is not mentioned in any German text: In 2025, German financial regulator BaFin ordered Ethena GmbH to terminate its business on the token that required authorization.

This article will explain these two points. It will explain how the revenue mechanism works and under what circumstances it will be reversed, and explain what BaFin's 2025 order means to you now. Each data is accompanied by a date and source so that you can verify the calculations yourself. Price forecasts will not be given here.

What is USDe? Why is it not a reserve-backed stablecoin like the USDC?

USDe is a crypto token designed to track the price of the US dollar, but its price stability is achieved through hedging transactions rather than relying on the US dollar in a bank account.

This is what distinguishes it from the USDC or USDT, which rely on bank deposits and short-term government bonds as core support.

BaFin described the structure in clear, self-styled terms in a consumer notice dated March 21, 2025: Ethena GmbH is the issuer of an asset reference token called USDe, which "only holds other crypto assets as asset reserves, according to its own statements" and price stability will be "ensured through algorithms and with the help of hedging derivatives." This is the official short version of what the industry calls the "synthetic dollar."

An asset reference token, listed under this name in the European crypto asset regulation MiCAR, is a crypto-asset designed to keep its value stable by reference to other values, rights, or currencies. This classification is not formal because it determines what authorizations the issuer needs in Europe and is the starting point of the entire litigation process against the German company.

This design can be understood more intuitively through scale comparison. Based on measurement via the CoinGecko Price API on August 21, 2026 at 12:39 UTC, USDe's market value is US$4.063 billion and its price is US$0.9997 (EUR 0.85497). In the same query, USDT was US$183.04 billion and USDC was US$72.8 billion. As a result, the USDe is large enough to attract systemic attention, but small enough that most holders do not understand its mechanisms.

Where does USDe's revenue come from? -- Delta-neutral positions and funding rates

Delta-neutral means that two equal amounts of reverse positions cancel out price fluctuations, so profits are no longer price-dependent.

Anyone who holds a crypto asset and shorts the same amount through a futures contract will not make a profit when the price rises, nor will it lose money when the price falls. All that remains is the fee the derivatives market pays to hold reverse positions.

This payment stream is called the funding rate. A perpetual contract is a futures contract with no expiration date; in order to prevent its price from deviating from the spot price for a long time, buyers and sellers settle within a short period of time. When the market is bullish, long positions pay fees to short positions. As a result, people who hold assets and short will gain gains. How this mechanism works, what role the clearing threshold plays and what impact it has on taxation have been detailed in our previous explanations.

Therefore, the gains on synthetic dollars are not interest payments in the bank's sense. It is the price a generally optimistic derivatives market pays for headwinds. As long as there is more money betting on rising prices than betting on falling prices, money will flow in the short direction. This also explains why the benefits of such structures surge during the upswing phase and dry up in calm markets.

What happens when the funding rate turns negative?

If sentiment in the derivatives market reverses, the direction of payments will also reverse: short positions start paying out to long positions, and the model's source of revenue becomes cost items.

Hedged positions are still insensitive to price fluctuations, but from that moment on, they no longer bring benefits and continue to consume money.

Two additional burdens arise at such stages, which are no small matter. First, the hedged position itself exists on a derivatives exchange: anyone who deposits collateral there bears the risk of default on the trading platform. Second, the quality of a reverse position depends on the liquidity of the market when it is closed. In volatile markets, bid-ask spreads widen, and a paper-neutral position can be more expensive to close than models predict.

For you as a holder, this is a simple test question. Returns from funding rates are linked to market conditions, and no one can guarantee them. So even though marketing materials like to package it as fixed rates, it actually isn't.

USDe and sUSDe: Why the proceeds depend on the second token

The proceeds do not flow automatically to every USDe holder. The gain occurs only when the holder converts the token to the second gainful variant.

The code for the second variant is sUSDe. BaFin described the connection verbatim in a notice dated March 21, 2025:"USDe and sUSDe tokens are connected in such a way that investors can exchange one USDe token for one sUSDe token. This sUSDe token gives investors the right to receive USDe token refunds and additional income."

This structure is also the entry point for regulators to open up a second front. In the same text, BaFin disclosed its "fully substantiated suspicion" that the sUSDe token was publicly sold in Germany, but did not provide the required securities prospectus. A prospectus is a document by which issuers must disclose the risks of publicly sold securities; without it, investors lack a censored information base.

The principle behind synthesizing the U.S. dollar: As long as long as long and short parties maintain equal weights and can be traded, holding and hedging will balance each other.

How does USDe compare to USDT and USDC?

With a market value of US$4.063 billion, USDe is a mid-sized U.S. dollar token, but it has a significant lead among assets not backed by traditional fiat currencies.

As background, we quote again our measurement data at 12:39 UTC on August 21, 2026: USDT is US$183.04 billion, USDC is US$72.8 billion, and USDe is US$4.063 billion.

As a result, the gap with market leaders is approximately 45 times. Anyone who wants to compare reserve issues with large providers will see audited reserves at the USDT (with KPMG's August 2026 audit opinion) and continuously adjusted trading positions at the USDe. The difference between audited reserve holdings and ongoing hedging trading positions is the real core of this comparison.

Measures taken by BaFin against Ethena GmbH since March 2025

During the ongoing authorization process, BaFin discovered serious flaws based on its own statement and issued immediate implementation measures on March 21, 2025.

According to official notices, these measures include instructing custodians to freeze asset reserves, restricting the manager's disposal rights of the reserves, instructing to stop conducting new business with customers, and appointing a special commissioner to monitor compliance. A special commissioner is a person appointed by a regulatory body and assumes responsibilities and powers within the company.

Some key data from the same source helps understand the background. Ethena GmbH, headquartered in Frankfurt, will issue the token in Germany from June 28, 2024 and apply for authorization on July 29, 2024, allowing it to take advantage of MiCAR's transitional system. As of the time of the notice, approximately 5.4 billion coins were in circulation, a large proportion of which were issued outside Germany before June 28, 2024. Starting from January 1, 2025, Ethena BVI Limited, headquartered in The British Virgin Islands, will also issue the same token.

Subsequent progress was recorded in the notice dated April 15, 2025. The company withdrew its authorization application on April 3, 2025, thus ending the process and eliminating the transitional system. On April 4, 2025, the regulator imposed a total fine of 600,000 euros and prohibited payment and disposal; on April 14, it ordered the termination of business requiring authorization. The legal basis is the German Crypto Market Regulation Act. In the same notice, the regulator recorded that the company was unable to provide it with reliable data on the number of customers in the EU and that this was the first application of MiCAR measures.

To be fair, it is necessary to mention the other party's position, which is also reflected in the notice: Ethena GmbH objected to the above decision on April 22, 2025, and according to the regulatory agency, these measures were implemented immediately but not final. The future effect of the March 21, 2025 orders will be lifted from June 25, 2025, because the termination order has replaced them.

Redemption procedures and termination: What applies from August 7, 2025

On June 25, 2025, BaFin initiated the redemption procedure and gave the holder a 42 calendar day period.

The original text of the regulator reads as follows: "USDe token holders have the opportunity to claim redemption rights from Ethena GmbH in accordance with the provisions of the European Union Cryptographic Asset Markets Regulation (MiCAR) between now and August 6, 2025 (a total of 42 calendar days)." The process is conducted under the supervision of the Special Commissioner.

Three consequences of the order are worth understanding because they still apply today. Since then, Ethena GmbH has been considered terminated in Germany, the European Union and the European Economic Area. From August 7, 2025, rights can only be claimed against Ethena (BVI) Limited, a company located outside the European regulatory framework. In addition, tokens issued by the issuer can only be exchanged for USDC tokens thereafter.

Regarding tradability, there is an official statement you should keep in mind when reading the English market report. In a notice dated April 15, 2025, BaFin wrote: "Trading USDe tokens on the EU's secondary market is no longer allowed." On March 21, 2025, the same regulatory agency also made it clear that its measures would not affect the secondary market. How your particular trading platform implements this legal position is a decision it makes at its own discretion based on its own authorization; you must verify for yourself, and you can consult relevant regulatory information as to which platforms are licensed in Europe.

This case fits a pattern that has hit German investors many times since the European rules came into effect. When Revolut stopped offering USDT transactions to European customers, this ultimately resulted in forced conversions with tax consequences for many holders. The difference in the USDe case is that regulators do not start with the trading platform, but directly target the token issuer itself.

The redemption deadline for the German company has expired on August 6, 2025; since then, claims have to be filed against companies located in The British Virgin Islands.

Impact of the FalconX Billion Dollar Credit Line on Reserves

On August 19, 2026, prime brokers FalconX and Ethena announced a $1 billion secured credit line through which funds in the assets behind USDe will flow to overcollateralized institutional loans.

This is the content of a press release issued by the relevant company through the publishing service.

The structure is also described therein: Lending is made through a Special Purpose Vehicle (SPV). The collateral for financing loans is held by qualified custodians, and FalconX assumes the roles of lender, manager and collateral manager. Overcollateralization means that the borrower provides collateral worth more than the credit it receives.

What this means for the revenue mechanism has been explained by the participants themselves and is attributed to them. Guy Young, founder of Ethena Labs, quoted in the announcement: "Secured institutional loans are one of the largest and most lasting sources of return in the financial sector, and chain capital has barely touched this area." Craig Birchall, head of lending at FalconX, talked about the shift from "fragmented funding pools" to integrated capital structures. Question translated into this article: Part of the future income will come from loan interest, so it will come from a source different from the funding rate.

Two things were clearly not mentioned in the announcement. One is the share of the credit line in total reserves, and the other is what kind of benefits it can bring to interest-bearing token holders. Anyone who interprets the announcement as proven evidence of improved earnings is reading too much.

Reverse data for ENA's rebound: More capital, fewer users

Governance token ENA has increased much more than the overall market in the past 24 hours, while protocol usage data points in the opposite direction.

Our measurement through the CoinGecko Price API at 12:39 UTC on August 21, 2026: ENA price was US$0.140268 (EUR 0.119961), up 41.87% in 24 hours, and the market value was US$1.378 billion. During the same period, Bitcoin rose 7.16% to US$76,871, so the overall market was clearly moving in the same direction. As a result, this increase is partly due to overall market conditions and partly due to the asset itself; the specific proportion cannot be drawn from these data.

More interesting than the price is the operational data, and the reverse calculation provided by professional service provider AMBCrypto on August 20, 2026 is worth reading. On the positive side: The value of the funds deposited in the agreement (known in jargon as the total locked value) increased by $114 million to $4.398 billion between August 18 and deadline, and data service provider Artemis recorded a record net deposit of $214 million. On the negative side: The number of daily active addresses dropped to 1,400 from 2,700 on August 7; agreement revenue in the first 19 days of August was $136,000, compared with $709,000 in May; based on this calculation, of the $3.67 million in 7 days, only $84.11 in the last 24 hours.

Therefore, both bullish and bearish views exist and are both attributed to their authors. As AMBCrypto explains, optimistic interpretations suggest that new capital is flowing in and view it as a sign of growing confidence. A skeptical view of the same analysis counters that capital inflows appear to come from a few locations and yields lag behind price movements. Summarizing its findings, the service itself said more money without more users may be the most revealing sign of this trend.

German Crypto Tax: What Will a Forced Conversion to USDC arise

In Germany, the exchange of one crypto token for another, whether voluntary or not, is considered a disposal of the first token and an acquisition of the second token.

This is the entry point for regulatory orders to enter your tax return.

Specific to the USDe case: Anyone who converts USDe to USDC during redemption proceedings is deemed to have disposed of USDe for tax purposes. Whether taxable effects occur depends on the holding period and the difference between the acquired value and the disposal value. For tokens hovering around $1, these amounts are usually small, but fluctuations in the exchange rate between the euro and the dollar can cause them to exceed your expectations. We have elaborated on the basic logic in our July 2026 article on stablecoins and taxation.

The second point concerns the benefits themselves. Inflows from interest-bearing tokens are tax different from capital gains realized on sales and must be recorded separately. Anyone who receives a small amount of money within a few months faces a long list at the end of the year, and clear reconstruction by hand is almost impossible.

Key terms in this article are explained in one sentence for each word

In order that you will not be confused by technical terms when reading other materials, the following are definitions of the terms in this article one by one.

Synthetic U.S. Dollar: A token that is pegged to the U.S. dollar by hedging transactions rather than hosting U.S. dollar balances.

Asset reference token: Under EU MiCAR regulations, crypto assets that are intended to maintain their value stable by reference to other values, rights or currencies.

Delta neutrality: A position arrangement in which holding and equal amounts of opposite positions cancel out price fluctuations.

Perpetual contract: A futures contract with no expiration date, the price of which is linked to the spot price through regular settlement payments.

Funding rate: Settlement payments between long and short positions of perpetual contracts flow in a certain direction based on market sentiment.

Overcollateralization: The value of the collateral provided in the loan is higher than the loan itself.

Special Purpose Vehicle (SPV): A company established specifically to carry a single transaction whose assets remain separate from those of the founders.

Special Commissioner: A person appointed by a regulatory body to exercise duties and powers within a regulated company and supervise the enforcement of orders.

Securities prospectus: Issuers must publicly disclose documents about the risks of public sales of securities.

Three checks before holding interest-bearing U.S. dollar tokens

For any token that promises a gain, the key questions are: Who pays the gain and what conditions need to be maintained to continue the payment?

From the USDe case, some checkpoints can be deduced that also apply to other structures.

First,Clarify what reserves consist of. Bank deposits and government bonds, unlike continuously adjusting trading positions, have different weaknesses. Second, Check where the issuer is located and the agency responsible for overseeing it, because in a dispute, this determines who you can turn to. Third, Check whether the proceeds are automatically accumulated or pegged to the second token, as this involves a separate legal issue. Fourth, Keep in mind that even if you never wanted it, forced conversions will have a tax impact on you.

Ethena USDe: Summary

There is a price for gains, and this price exists in the derivatives market.

As long as the market is optimistic, long positions will pay out to short positions. If the funding rate turns negative, the source of income becomes a continuing cost item. If you want to understand the market firsthand, rather than holding it indirectly through tokens, you can compare fee and funding models for different perpetual contract DEX platforms.

Please check who is responsible before purchasing.

In the case of Ethena GmbH, the authorization process ended with the termination of the business requiring authorization, and from August 7, 2025, claims had to be filed against companies in The British Virgin Islands. You can see which European trading platforms are authorized in the comparison of regulated exchanges.

Record each redemption, including mandatory redemption.

Convertions under orders are tax disposals, in addition to separate inflows from interest-bearing tokens. Timely recording can avoid rebuilding in the spring.

Sources: Consumer notices from regulators of redemption procedures, and announcements of credit facilities.

(As of August 21, 2026. This article does not constitute investment advice. Price and fee structures will change; please check terms with your provider before purchasing.)