Tokenomics de Ethena (ENA)

Overview

Ethena (ENA) is the governance and utility token of the Ethena protocol, which issues the synthetic stablecoin USDe. The token economics of ENA are designed to incentivize ecosystem growth, align stakeholders, and ensure long-term protocol sustainability. Below is a comprehensive breakdown of the issuance, allocation, usage, incentive, locking, and unlocking mechanisms, with supporting tables for clarity.

Issuance Mechanism

• Initial Minting: ENA tokens were initially minted at launch. The protocol includes a mint function, controlled by a multi-signature wallet, which allows for additional issuance up to 10% of the total token supply, but only once every 365 days. The first mint counted as the initial issuance, so no further minting can occur until at least April 2, 2025.
• Inflation Control: The MAX_INFLATION variable restricts the total number of tokens that can be minted, and the MINT_WAIT_PERIOD enforces a minimum interval between mints.

Allocation Mechanism

Key Unlock Events:

• Airdrop: 10% of the ecosystem allocation was distributed as airdrops in the first and second reward seasons (March 2024).
• Ecosystem Development: Ongoing, with a portion held by a DAO-controlled multisig for future campaigns and partnerships.

Usage and Incentive Mechanisms

• Governance: ENA holders will be able to vote on protocol parameters, risk management, collateral composition, exchange/custodian exposure, DEX integrations, cross-chain initiatives, product prioritization, community grants, Reserve Fund sizing, and yield distribution.
• Staking and Locking: Users can lock ENA to receive sENA, a liquid receipt token that earns rewards (initially from unclaimed airdrop ENA). sENA is composable in DeFi and is intended to reward long-term aligned users.
• Restaking: ENA can be restaked in partnership with Symbiotic to provide economic security for cross-chain USDe transfers and future Ethena Network applications.
• Liquidity Incentives: USDe and ENA holders are incentivized to provide liquidity on platforms like Curve and Uniswap through campaigns (e.g., Shard and Sats campaigns).
• Points Campaigns: Users earn points (shards, sats) for holding, staking, locking, and providing liquidity, which can be converted into ENA or other rewards.

Example: Shard Distribution (as of Feb 29, 2024)

Locking Mechanism

• ENA Locking: ENA can be locked to receive sENA, which is liquid and can be used in DeFi. Locking aligns users with long-term protocol growth and grants access to additional rewards.
• USDe Locking: USDe can be locked to earn boosted rewards in points campaigns.
• Unstaking/Unlocking: sUSDe and USDe lockers can initiate an unlock process, which takes 7 days before withdrawal is possible. There are no minimum/maximum staking amounts.

Unlocking Time and Vesting

• Cliff and Vesting: Both core contributors and investors are subject to a 1-year cliff (no tokens unlocked before 1 year), after which 25% unlocks instantly, and the remaining 75% vests linearly over 3 years.

Additional Notes

• Multi-Sig Control: Key protocol functions, including minting and fund management, are controlled by multi-signature wallets with varying signatory requirements for security.
• No Native Staking for Security: Staking is not used to secure the network, but rather to align incentives and distribute rewards.
• Governance Rollout: DAO governance is planned for Q2 2024 and beyond, with ENA holders gaining increasing influence over protocol decisions.

Summary Table: ENA Tokenomics

For further details, see the Ethena documentation and governance forum.