Buybacks tied to a supply ladder

Ethena has put its fee switch to an on-chain vote. What distinguishes this from the years of talk about flipping one on is that the proposal attaches the mechanism to a growth condition rather than to a governance mood.

The design has two layers. The share of gross protocol revenue routed to the Foundation rises in steps as USDe supply grows — 5% once supply passes 7.5 billion dollars, 10% at 10 billion, 15% at 15 billion, and higher beyond that. Then 95% of whatever the Foundation collects goes to buying ENA, with the remainder funding growth.

The interesting part is the backtest, published on Ethena's governance forum by Blockworks Advisory, because it measures the thing token holders usually assume rather than check.

• The trigger would have been active on 118 of the last 705 days — roughly one day in six, not continuously.
• While live, it would have bought ENA at approximately 52.7 million dollars on an annualised basis.
• On the 93 days when sUSDe already out-yielded Sky's sUSDS, it stayed ahead after the buyback's cut on 82 of them. On the other 11 it slipped behind by less than a tenth of a percentage point.

That last line is the design question answered with numbers: whether paying token holders costs the stablecoin its competitive yield. On this data it mostly does not, and where it does the margin is small enough to be inside the noise of a rate comparison.

The vote arrived with a clearing of other overhangs. The Foundation spent the preceding fortnight buying out early investors who had been selling into the market since October, and Labs agreed in principle to hand the protocol's intellectual property and economic upside to the Foundation rather than to its own equity holders. Ethena also filed with the Blockworks Token Transparency Framework, joining more than forty other protocols in that disclosure standard.