Ethena (ENA), the crypto protocol behind the $4 billion synthetic dollar USDe, is looking beyond digital assets for its next major yield source. The protocol announced Friday plans to expand its signature basis-trading strategy into equity perpetual futures, betting that surging funding rates in leveraged stock trading can deliver richer and more reliable returns than its existing crypto operations.

Market Context

The expansion comes as USDe's supply has contracted sharply from its 2025 peak near $15 billion to below $5 billion, prompting Ethena to seek new return streams. Meanwhile, equity perpetual open interest has surged tenfold since March to $6.2 billion from less than $1 billion, creating sufficient liquidity for Ethena to begin deploying capital. The protocol recently announced a $1 billion FalconX facility that can put USDe backing into overcollateralized institutional loans.

Analysis

Ethena's strategy mirrors the trade it has run since launching USDe with bitcoin, ether and solana: hold exposure to an asset while shorting its perpetual contract and collecting funding paid by leveraged long traders. The difference is that equity perpetuals have delivered significantly higher funding rates this year compared to crypto markets. Funding rates on equity contracts averaged roughly 14% on Hyperliquid and 17.5% on Binance in recent months, versus low single digits for bitcoin over the same period.

Co-founder Guy Young highlighted a key structural advantage of equity perps in an X post: funding was positive on 94% of days on Hyperliquid and 97% on Binance once those markets reached meaningful scale. The median equity funding rate stood at 13.9%, compared with just 3.9% for bitcoin. "One other interesting characteristic which makes this more attractive versus crypto is the natural positive skew of funding distribution," Young wrote.

The appeal extends beyond yield. Equity funding showed almost no correlation with bitcoin funding, potentially giving USDe a return stream less dependent on crypto market cycles. Stocks have tended to rise over long periods, creating persistent demand for leveraged long exposure, while crypto funding can compress or turn negative during bear markets when leverage demand dries up. Bitcoin funding averaged 11% in 2024 and 4.9% in 2025 before falling to just 2.2% year-to-date through August 11.

Key Numbers

- $6.2 billion: Equity perp open interest, up tenfold from under $1 billion in March

- 13.9%: Median equity funding rate on Hyperliquid and Binance

- 3.9%: Median bitcoin funding rate over the same period

- 14%: Average equity perpetual funding rate on Hyperliquid

- 17.5%: Average equity perpetual funding rate on Binance

- $4 billion: USDe current supply, down from peak near $15 billion

- 12-24 months: Timeline Ethena expects real-world asset perpetuals to eclipse crypto derivatives in backing

What to Watch

Ethena's initial deployment size into equity perps and whether major market makers provide the liquidity depth needed for institutional-scale operations. The protocol's $1 billion FalconX credit facility could serve as a bridge, allowing USDe backing to earn yield while equity perp infrastructure matures.