Ethena plans to diversify its USDe synthetic dollar reserve assets into commodities, equities, and institutional lending, aiming to boost its collapsing yield and market performance. Founder Gary Young stated the protocol has been “poorly positioned” since the October crash, which compressed crypto yields and triggered volatility. USDe’s supply has fallen 2.5x to below $6 billion as its yield now matches the safer U.S. Treasury Bill rate.
The Ethena protocol intends to diversify the reserve assets backing its USDe synthetic dollar into non-crypto assets. Founder Gary Young stated the protocol has been “poorly positioned” since the October market crash compressed yields and increased volatility.
Young detailed that the USDe reserve will now access basis on commodities and equities, institutional triparty collateralized lending via Coinbase, Kraken, and Anchorage, and prime lending across CeFi and HyperliquidX. Previously, Ethena generated yield from staking rewards and capturing basis across Bitcoin, Etherean, and Solana.
The ongoing market rout derailed this crypto-native strategy. In late 2024 and early 2025, USDe yield hovered between 10% and 22%, significantly above rival products and the 4% Treasury Bill yield.
However, the yield collapsed in 2025. As of April 2026, the weekly average yield has fallen to 3.54%, matching the current Treasury Bill rate.
This prompted substantial user redemptions. Over $9 billion was redeemed from USDe in late 2025, leading to consecutive monthly outflows.
The synthetic stablecoin’s market cap has declined from $14.8 billion to $5.8 billion, a 2.5x reduction. Young argued the diversification should have been done earlier, stating each new income stream represents “multi-billion capacity opportunities” to improve product resilience.
