Ethena

Overview

Ethena is a crypto protocol that aims to create a stablecoin system (USDe) backed by ETH and hedged using perpetual futures. The ENA token serves as the protocol's governance token and provides staking rewards to participants.

Purpose and Utility

The primary purpose of ENA is to serve as a governance token for the Ethena protocol, allowing holders to participate in decision-making regarding protocol parameters and upgrades. Token holders can also stake ENA to earn rewards from protocol revenue.

Business Model

The protocol generates revenue through its stablecoin minting and hedging operations. Users who mint USDe provide ETH collateral, which is then delta-hedged using perpetual futures to maintain stability. The protocol earns fees from minting operations and trading activities.

Development and Adoption

The protocol launched in early 2024 and has seen rapid adoption in its initial phase. The development team appears active, with regular updates and improvements to the protocol infrastructure.

Token Distribution

The token distribution includes allocations for the team, early investors, and the community, with vesting schedules in place for team and investor tokens. The exact distribution percentages have been publicly disclosed in the protocol documentation.

Revenue Model Analysis

The primary concern from a Shariah perspective is the protocol's heavy reliance on perpetual futures for hedging and the earning of interest-like yields. While the protocol provides utility through its stablecoin system, the mechanisms used involve elements that raise questions about compliance with Islamic financial principles.