Ethena Foundation buys out early investors in major ecosystem, token overhaul

The Ethena Foundation said on Thursday, August 27, it had bought out locked tokens from certain major seed investors that had sold down part of their holdings.

This is the first of four changes the foundation outlined for the synthetic-dollar protocol and its ENA governance token.

Buying back what early backers were dumping

The Foundation disclosed the buyout in a post on X, while it also shared a more detailed blog post.

On the first point, the Foundation stated that it “executed a buyout of all locked tokens from certain major seed investors that sold any” of their positions.

One of the challenges that has plagued ENA is the selling pressure from investors who unlock their tokens. The Foundation pulling locked seed allocations off the table removes a block of supply that could otherwise hit the market as they unlock.

Ethena wants to ensure that by October 5, there will be no investor tokens that are subject to lockups.

This is related to the second point that the Foundation raised: they have agreed with their lead investors to end future overhang that is associated with monthly VC unlocks by releasing unvested tokens.

They say that team locks are still in place and still tied to their vesting schedules.

The Foundation and Ethena Labs have also reached an agreement that will see the IP and ownership of value accrued by the protocol assigned to the Foundation exclusively.

The fourth update is a proposal that wants to route 95% of the protocol’s net revenue into ENA buybacks.

A $5.4 billion protocol built on synthetic dollars

Ethena runs a synthetic-dollar protocol on Ethereum. Its USDe token holds a one-dollar peg by pairing crypto collateral with short futures positions. The model is different from that of cash-backed stablecoins like USDT and USDC.

In terms of funding, Ethena has raised a total of $166 million from different funding rounds. Franklin Templeton, Pantera Capital, Polychain Capital, Dragonfly Capital, and Binance Labs are part of the backers, according to DeFiLlama records.

Some of the early rounds are the source of the locked allocations now being addressed.

ENA’s price and a busy partnership year

ENA is currently trading around $0.166, having gone up by over 20% in the past 24 hours. The market cap is currently over $1.62 billion. Over a week ago, it was changing hands around $0.085.

While its price is seeing a boost, it is still far from its April 2024 all-time high of $1.52.

The Foundation’s buyout announcement comes a few hours after it was reported that a Hack VC-linked wallet sold $3 million of ENA into Wintermute during a 58% rally.

The overhaul caps a year of institutional deals. In June, Coinbase Ventures bought ENA on the open market and partnered with Ethena on onchain savings products aimed at a combined user base of more than 100 million.

In August, FalconX and Ethena opened a $1 billion secured lending facility that channels reserves backing USDe into overcollateralized institutional loans, giving the protocol a yield source outside futures funding.

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