USDe has set a new industry record by hitting $10 billion in total value locked (TVL) in just 500 days, making it the fastest stablecoin in history to reach that milestone.

The protocol behind USDe, Ethena Labs, posted:

“everyone wants to know what we’d say if we didn’t reach $10b supply

i guess we’ll never know”

The GENIUS behind the rise of USDe

USDe’s rapid climb has coincided with the passing of the GENIUS Act, the Guiding and Establishing National Innovation for U.S. Stablecoins Act, which represents the first comprehensive federal framework for stablecoins in the United States.

Enacted on July 18, 2025, it imposes strict new rules on issuers, including 1:1 reserve requirements in low-risk assets, robust federal oversight for large issuers, and strong consumer protections such as priority repayment rights in the event of failure.

The most impactful provision of the ACT, however, and the catalyst behind the rise of USDe, is the prohibition on regulated issuers paying yields on stablecoins, as CoinFund president Chris Perkins told CryptoSlate:

“Under GENIUS, stablecoins do not pay interest to end users, and without interest, stablecoins are depreciating assets. So, holders will seek yield. And that’s where DeFi comes in. If the Treasury Department’s projections are correct and trillions of stablecoins come into the system, expect DeFi summer on steroids as users seek to maximize yield by engaging across a variety of yield strategies. Users will be drawn to yield-bearing vaults, and they will commission AI agents to optimize their returns.”

This ban on yield payments is causing a profound realignment in the stablecoin market. Capital that once flowed to traditional, yield-paying stablecoins such as USDC has been seeking alternatives, and much of it has landed with USDe. As prominent crypto trader, Cas Abbé, pointed out:

“The reason behind this growth is GENIUS Act approval, which prohibit issuers to provide yields on stablecoins.

Due to this, big money has now shifted to $USDe which provides lucrative yield.”

DeFi yield opportunities fuel demand

Ethena Labs has been able to attract this demand thanks to continued yield offerings via decentralized finance (DeFi) mechanisms, which fall outside the restrictions placed on federally supervised issuers. The result is a massive inflow of institutional and retail capital, propelling USDe past many of its competitors. The ENA governance token has also experienced a price appreciation of over 100% in the past month.

USDe’s $10 billion milestone is a testament to how dramatically the GENIUS Act has reshaped the stablecoin landscape. While the law tightens controls and imposes new safeguards, it has also created opportunities for nimble, DeFi-native protocols to capture yield-hungry capital, proving that regulatory shifts don’t have to stifle innovation.

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Ethena Labs reached $290.2 million in total protocol revenue on July 9, trailing only Tether, Circle, and Sky among stablecoin issuers. 

Token Terminal data show that the stablecoin issuer reached $100 million in cumulative revenue 251 days after its launch, making it the second-fastest protocol to cross this threshold.

Daily fees averaged $3.1 million during the past month as traders continued to mint and hedge the synthetic-dollar token USDe. Ethena’s path to nine-figure revenue took 251 days, faster than Uniswap’s 980-day sprint in 2020 but slower than memecoin launchpad Pump.fun, which hit the mark in 217 days late last year. 

Core income is generated by carrying long spot and short perpetual futures positions across multiple exchanges, a delta-neutral strategy that converts funding-rate spreads into protocol earnings credited to stakers of the yield token sUSDe.

Back-end Treasury data shows that 94% of backing assets remain on centralized venues, where Ethena’s automated execution system balances collateral and hedges in real time. The remaining collateral is held in liquid-staking tokens to capture staking rewards while maintaining a neutral net exposure. 

The protocol redirects 20% of gross fees to buy ENA on the open market, a mechanism that has burned 58 million tokens since February, according to on-chain trackers.

SEC dialogue on payment stablecoin status

Ethena’s General Counsel, Zach Rosenberg, and attorneys from Morrison Cohen met with the US Securities and Exchange Commission’s (SEC) Crypto Task Force on July 1 to request clarity on “synthetic dollars,” such as USDe. 

A meeting memorandum released by the SEC shows that the team argued that USDe functions as a payment instrument rather than a security because holders do not rely on the issuer’s efforts for profit and because redemption rights track underlying reserves, not the issuer’s balance-sheet performance. 

The submission cites two pending bills, the GENIUS Act and the STABLE Act, that would carve out a federal licensing lane for payment stablecoin issuers. Ethena told staff that USDe falls outside both drafts because the token can fluctuate slightly around $1 and carries no legal promise of par redemption, leaving it in regulatory limbo.

Company representatives urged the commission to treat synthetic dollars as a separate class and to coordinate with bank regulators if Congress finalizes a payment stablecoin framework. 

Ethena remains barred from US retail distribution pending formal guidance, so new dollar inflows primarily come from offshore funds and market-making desks that hedge their exposure on centralized exchanges. 

The protocol’s revenue pace slowed in May when average perpetual funding spreads compressed below an 8% annualized rate. Still, fee intake rebounded to $3.8 million per day in early July as renewed long-bias returned the basis to double-digit territory.

Ethena’s request for formal SEC feedback remains under review, according to the meeting log.

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In a move that could reshape the way we use Telegram for financial transactions, Ethena Labs is partnering with the TON Foundation to introduce its synthetic dollar stablecoins—USDe and sUSDe—to the TON blockchain. Since Telegram connects over 1 billion users every month, this collaboration has the potential to offer a variety of new financial tools directly within the familiar messaging app.

A Closer Look at the Stablecoin Rollout

Rebranding for the TON Ecosystem

For the TON community, sUSDe will be rebranded as tsUSDe. Both USDe and tsUSDe will be supported across a range of Telegram-friendly wallets, including:

1. Telegram’s Built-in Custodial Wallet: Ideal for users who want straightforward crypto management.

2. TON Space: A self-custodial wallet for those who prefer full control over their assets.

3. Third-Party Wallets (Tonkeeper, Tonhub, and MyTonWallet): Expanding accessibility and encouraging broader adoption within the TON ecosystem.

This multi-wallet strategy is designed to meet the varying levels of comfort people have with holding their own assets while making synthetic stablecoins more accessible to Telegram’s global community.

Earning Yield with tsUSDe

One highlight of this partnership is a 10% APY on tsUSDe holdings, offered through participating wallets. As of early May 2025, users with non-custodial wallets (like Tonkeeper or TON Space) already receive weekly TON token rewards, with more wallets scheduled to join soon. These incentives are in addition to Ethena’s usual sUSDe yield mechanisms, creating extra ways for users to earn.

Source Ethena

Introducing “USDT Earn”

On top of that, Ethena plans to roll out a “USDT Earn” feature. This will let people deposit their Tether (USDT) and collect returns tied to the performance of USDe. In other words, if you hold USDT but still want to tap into Ethena’s synthetic stablecoin ecosystem, you’ll have an opportunity to earn extra yield.

Boosting TON’s DeFi Scene

By bringing Ethena’s synthetic assets on-chain, the partnership aims to reinvigorate TON’s decentralized finance (DeFi) environment. Recent dips in user engagement have prompted the TON Foundation to focus on growing its ecosystem, and offering synthetic stablecoins and yield-earning opportunities could be a step in the right direction. Future development plans include:

• A TON debit card to turn crypto rewards into everyday purchases

• Payment integrations with Apple Pay and other debit services

• User-friendly tools to make peer-to-peer transactions and DeFi activities more accessible within Telegram

What Sets Synthetic Stablecoins Apart?

Unlike traditional stablecoins such as USDT or USDC—which are backed by fiat reserves—synthetic stablecoins like USDe rely on financial derivatives and hedging to stay pegged to the dollar. Ethena uses a delta-neutral strategy to keep its value stable and generatFe yield at the same time. This opens up flexible saving options and is especially appealing for users in economies dealing with inflation or volatile currencies.

Why Telegram’s Fintech Pivot Matters

This move by Telegram fits into a broader trend among messaging platforms, such as WeChat and Line, which have integrated payment features for convenience. Telegram, however, is diving deeper by embracing blockchain-based assets and decentralized wallets. Essentially, it’s aiming to be part instant messenger and part financial hub—all in one app.

Staggered Rollout Throughout May 2025

Ethena’s integration with TON will happen in stages. Initially, tsUSDe and USDe will be compatible with non-custodial wallets like Tonkeeper and TON Space. After that, support will extend to Telegram’s own custodial wallet. Later phases will focus on weaving these synthetic assets into more areas of TON’s DeFi ecosystem, giving users ample ways to trade, lend, and save.

For Ethena, teaming up with the TON Foundation means tapping into a massive user base that extends across the globe. For TON, offering yield-bearing synthetic stablecoins could help bring renewed energy to its blockchain scene.

For Telegram’s hundreds of millions of users—especially those in places dealing with currency risks—these new features may offer a practical way to save, earn yield, and transact in dollar-pegged assets without ever leaving the app they already use daily.

BaFin, Germany’s financial regulator, banned all public sales of Ethena GmbH’s USDe token this week, citing flaws in the approval process and violations of the European Union’s Markets in Crypto-Assets Regulation (MiCAR).

The regulator outlined several immediate actions against Ethena GmbH to enforce the ban.

According to BaFin, the synthetic dollar token had been offered as an unregistered security in Germany, prompting the authority to restrict its operations without delay.

BaFin Orders Asset Freeze and Website Shutdown for USDe Token

In its announcement, BaFin instructed Ethena GmbH to freeze the reserve assets backing the USDe token and halt all new customer registrations.

The company must also shut down its website, and a special representative has been appointed to oversee compliance with these directives.

“The BaFin also has reasonable grounds to suspect that Ethena GmbH in Germany sells securities in the form of sUSDe tokens from Ethena OpCo. Ltd. without the required prospectus,” the regulator said.

“The USDe and sUSDe tokens are interconnected in such a way that investors can receive a sUSDe token in exchange for a USDe token,” it added.

Despite the prohibition on primary sales and issuance, secondary market trading of USDe remains unaffected by the ban.

BaFin identified “serious deficiencies” in Ethena GmbH’s approval process, including noncompliance with MiCAR’s capital and asset reserve requirements.

Ethena GmbH had been operating under a transitional provision that allows issuers of asset-referenced tokens to continue business while awaiting regulatory approval.

The company applied for authorization on July 29, 2024, a day before the deadline, and has been issuing USDe in Germany since June 28, 2024.

Currently, approximately 5.4 billion USDe tokens are in circulation, with a substantial portion issued outside Germany before MiCAR took effect.

To safeguard customer interests, BaFin has ordered the company’s asset reserves to block and restrict the authority of its managing directors over those funds.

Holders of USDe tokens cannot redeem them directly with Ethena GmbH, though trading on secondary markets continues as normal.

BaFin’s statement also raised concerns about the company issuing sUSDe tokens, suggesting they could constitute unregistered securities.

The tokens are linked to USDe, allowing investors to exchange them while receiving additional returns.

The regulator is now considering further enforcement actions, which could include a complete ban on the public offering of these securities.

BaFin is overseeing the authorization process in collaboration with the European Central Bank (ECB), the European Banking Authority (EBA), and the European Securities and Markets Authority (ESMA).

Further details will be provided upon completion of the licensing process.

Ethena Defends USDe Token Amid BaFin Ban

Following BaFin’s ban on USDe in Germany, Ethena Labs reassured users that redemptions remain unaffected through its British Virgin Islands-based entity, Ethena BVI Limited.

The company, addressing the situation on X, stated that while its German subsidiary’s MiCAR application was denied, USDe remains fully backed.

“We are disappointed by this decision but will continue evaluating alternative regulatory frameworks,” Ethena wrote.

The firm also dismissed claims that its assets were frozen, clarifying that all funds remain accessible.

It plans to update its terms in the coming week to reflect the regulatory developments.

Ethena’s regulatory challenges come as institutional interest grows.

Recent investments include a $20 million backing from MEXC and a 500,000 ENA token purchase by World Liberty Financial.

BaFin Tightens Oversight on Synthetic Assets Across Europe

BaFin’s decision reflects the regulator’s cautious approach towards crypto assets operating within Germany’s jurisdiction.

Its ban on Ethena’s USDe token highlights the tightening regulatory grip on stablecoins and synthetic dollar tokens in Germany and across Europe.

With MiCAR enforcement ramping up, stablecoin and synthetic asset issuers will face increased scrutiny over compliance with capital, reserve, and disclosure requirements.

The outcome of BaFin’s assessment of Ethena GmbH could set a precedent for how synthetic dollar tokens are regulated under MiCAR across the EU.

Frequently Asked Questions (FAQs)

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Ethena Labs has integrated Chaos Labs’ data authenticity technology, Edge Proof oracles, to strengthen the risk management framework for its synthetic dollar token USDe.

Edge oracles will independently verify the total dollar value of the USDe’s reserves and the reserve coverage of USDe’s supply and confirm that reserves are governance-approved and delta-neutral. Chaos Labs shared the announcement exclusively with CoinDesk.

USDe, a synthetic stablecoin, maintains a soft peg with the U.S. dollar through an automated delta-hedging strategy that shorts bitcoin and ether perpetual futures to offset changes in the prices of these cryptocurrencies.

The synthetic stablecoin experienced volatility over the weekend, falling to 0.982 against tether and 0.988 against USDC, per Kaiko, amid fears that the protocol has multi-million dollar exposure to Bybit’s ether (ETH) derivatives market. The exchange was hacked late Friday, with a malicious entity draining over $1 billion in ether.

The so-called de-peg, however, was short-lived as Ethena assured investors that all assets backing USDe were held off-exchange and its reserve fund was more than enough to compensate for any losses from the Bybit exploit.

The integration with Chaos Labs adds another layer of credibility to USDe’s reserves, ensuring they stay secure and transparent.

The Edge Proof of Reserves (PoR) oracles will constantly monitor the reserve levels of tokens and check the collateral backing them. This is done by smoothly integrating off-chain data from custodians and centralized exchanges into the on-chain environment, ensuring scalable and robust support for institutional-grade applications.

The integration also provides automated alerts to notify users of any data anomalies or if reserve levels fall below the required thresholds. Verified data is publicly displayed on Ethena’s transparency page and attestor interfaces, keeping stakeholders informed.

“This integration ensures continuous, independent verification of reserves, fostering greater transparency and security for all users. By leveraging real-time, tamper-resistant data, Ethena reinforces its commitment to a robust and reliable synthetic dollar,” the announcement said.

Chaos Labs’ Edge oracle leverages zero-knowledge proofs to ensure security and privacy while providing real-time and transparent data verification, including for reserves held off-chain or across different blockchains.

These oracles have secured over $70 billion in volume, delivering risk management to decentralized finance (DeFi) giants like AAVE, Jupiter, GMX, and Tether.