USDe stablecoin welcomes the "dividend moment": Fee Switch activation is just one step away, market capitalization surpasses 12.5 billion USD.

The crypto-native stablecoin USDe offers high yields through spot and perpetual contract hedging, and its market cap has soared to $12.5 billion. This article explores its explosive growth, Fee Switch governance, and the potential risks it faces. (Synopsis: How much does it cost to issue a stablecoin?) (Background added: What is a yield stablecoin?) Inventory of five head projects: USDe, USDY, PYUSD) Different from USDT and USDC, which rely on US dollars or treasury reserves, USDe adopts a "crypto-native" stability mechanism. Users deposit ETH, BTC, or stETH into the protocol, and Ethena simultaneously goes long on these spot assets and opens an equal amount of short orders on centralized exchanges. In this way, regardless of how the market price fluctuates, the profit and loss of spot and short orders are basically offset, thus maintaining USDe stable anchor around $1. Building on this, Ethena launched sUSDe. Since perpetual contract funding rates are chronically positive, the protocol distributes the proceeds to users who stake Ethena. The advantages of this mechanism are: * High yield: USDe provides users with high yields by staking ETH and utilizing funding rates for perpetual contracts, which are currently much higher than traditional stablecoins. Decentralization: USDe does not rely on the traditional banking system and is seen as a "crypto-native" solution. Market demand: With new regulations such as the US GENIUS Act prohibiting regulated stablecoins from providing yields, USDe's non-bank design has attracted significant yield-seeking capital. At present, the annualized return of sUSDe is 9%, which is much higher than the 4.2% of USDC on Aave, which is an important reason for the continuous influx of funds. Data from RWA.xyz shows that USDe has seen significant growth in recent months. The market capitalization has risen to $12.52 billion, up more than 30% from 30 days ago. The number of holding addresses is close to 40,000, and the number of monthly active addresses exceeds 20,000, an increase of nearly 40%. Monthly on-chain transfers reached $57.8 billion, demonstrating their widespread use in settlement and payments. Since July, the USDe market cap curve has steered significantly, indicating that it has benefited from the advantages of stablecoin legislation and the attractiveness of high yields. It's worth noting that USDe is deployed almost entirely on the Ethereum mainnet, with a size of just $7.3 million on Solana. This means that USDe's liquidity is highly concentrated, and its stability may be tested once the Ethereum ecosystem fluctuates. Fee Switch: The "dividend moment" of the governance layer In addition to the soaring scale, the market is more concerned about the Fee Switch ( fee switch ) promoted by Ethena. This is a governance milestone: once opened, part of the revenue from the agreement will be distributed to ENA holders or injected into the treasury, transforming ENA from a "governance ticket" to an "asset with cash flow expectations". To achieve this, Ethena set three conditions: USDe in circulation of more than $6 billion, cumulative revenue of $250 million, and integration of at least four of the world's top five derivatives exchanges. At present, the first two items have been completed, and only the last one is still moving forward. The potential impact of Fee Switch is twofold. For ENA holders, this means that the value of the token is tied to the protocol income, and the market attention will be further enhanced. However, for sUSDe holders, if the distribution comes from the same income pool, the yield may be diluted as a result. How to find a balance between token value return, user returns and risk buffers will be a key test for Ethena's future. Risk: The volatility behind high yields The rapid rise of USDe is not without concerns. The core challenges of USDe are volatility in funding rates, counterparty risk on centralized exchanges, and liquidity management in extreme market conditions. First of all, its earnings depend on funding rates, and if the market turns into a bear market and funding rates turn negative, the high returns of sUSDe may disappear in an instant. Second, its hedging mechanism is highly dependent on centralized exchanges, and once the exchange encounters a black swan event, the exposure of the protocol will be difficult to control. In addition, Chaos Labs has warned that Ethena's asset re-staking may trigger a liquidity crisis for DeFi lending platforms, and S&P Global even gives USDe a risk weight of 1250% in its credit rating, much higher than USDT and USDC. These doubts highlight the potential fragility of the USDe model. However, despite these potential risks, USDe has not faced any liquidity crisis since its launch in 2023, nor has it deviated significantly from its USD-pegged target. This suggests that USDe's future will be a game between its design risks and its actual operational capabilities. Whether it can continue to effectively respond to market challenges while maintaining high yields will be key to determining whether it can gain a foothold in the cryptocurrency ecosystem. Related reports Bloomberg View: Hong Kong Taxi Demonstrates the Perfect Case of "Stablecoin Everyday Life" Falcon Finance Releases 18-Month Development Blueprint, Stablecoin USDf Circulation Exceeds $1 Billion "USDe Stablecoin Welcomes "Dividend Moment": Fee Switch Launch is Only One Step Away, Market Value Exceeds $12.5 Billion" This article was first published in BlockTempo's "Dynamic Trend - The Most Influential Blockchain News Media".