ENA Jumps 17% on Ethena Fee Switch Proposal Approval

Ethena’s native token, ENA, rose sharply after the governance approved a fee switch. This change aims to direct more benefits toward token holders. The vote eliminates a key uncertainty in governance and strengthens the link between Ethena’s growing business and its token.

With planned buybacks that will increase based on certain milestones, the decision gives ENA a solid reason for growth. However, how well they execute these plans will be very important. 

Ethena Fee Switch Proposal Wins Unanimous Approval

The Ethena Foundation has launched a plan to regularly buy back ENA tokens, which has received unanimous support from the community. Over 5 million ENA tokens were voted in favor of this initiative.

Under the plan, buyback activities are tied to specific targets for the USDe supply. The first target is to achieve a 14-day average USDe supply of $7.5 billion, which exceeds the current supply. Once this target is met, 95% of the revenue the Foundation generates from its core businesses will be allocated to purchasing ENA tokens. 

The buybacks will increase as USDe supply grows, with additional targets of $10 billion, $15 billion, and $20 billion. Ethena refers to this system as programmatic, meaning that buybacks will automatically increase as the organization reaches specific growth milestones.

The change follows other adjustments within the ecosystem. These include the acquisition of locked tokens from early investors and modifications to future venture capital unlocking schedules.

ENA Jumps 17% as Investors Reassess Token Value

Ethena’s native token, ENA, responded positively to the governance decision, jumping 17%. However, as of this writing, the token has shed some of its gains and is trading at $0.1695. CoinGecko market data indicates that the rally occurred alongside increased trading activity, showing that investors are reconsidering how ENA can be valuable now that a new fee switch links the protocol’s revenue to the demand for the token.

This change is important because previously, users criticized Ethena for not delivering value to token holders despite its growing business. The new system aims to fix that by creating a way for the protocol’s growth to lead to ongoing ENA purchases. This should boost demand.

Meanwhile, Ethena’s future success will depend on how well it can expand the use of USDe, generate revenue, and diversify its products in a sustainable way. The protocol is working on increasing USDe distribution and looking for new sources of revenue, such as funding and partnerships with institutions worldwide.

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