Why Analysts Call Ethena (ENA) the Biggest Altcoin Bet This Cycle

Ethena's synthetic dollar, USDe, has reached a market capitalization of 10 billion USD in just 500 days. This move consolidates its position as one of the fastest-growing stablecoins in cryptoasset history.

However, there are still doubts about USDe, with some analysts suggesting it could be the UST of this cycle.

Ethena and USDe Stablecoin's 10 Billion USD Milestone Opens Next Growth Phase

Ethena has surpassed 10 billion USD in TVL on Sunday, nearly doubling in less than a month. Last week marked one of Ethena's highest fee-generating weeks, with the protocol generating over 475 million USD in fees.

Supply has doubled in just the past month, a trend that has drawn investors' attention to the potential next boom phase.

According to analyst Crypto Stream, ENA, Ethena's governance token and protocol, may be on track to unlock a powerful new revenue engine. Four of the five governance-defined conditions to activate Ethena's fee switch have been met.

Ethena's governance framework sets strict thresholds for fee distribution:

• USDe supply over 8 billion USD — achieved.

• Protocol revenue over 25 million USD — achieved, currently over 43 million USD.

• Reserve fund of at least 1% of supply — achieved.

• sUSDe APY spread between 5.0-7.5% — achieved, currently around 10%.
• USDe integration on three of the top five derivatives exchanges — not yet achieved.

The analyst notes this paves the way for protocol revenue to be distributed to ENA holders. The final barrier is listing on Binance or OKX.

"Fee switch activated: Ethena is a revenue monster. At some point, revenue will flow into ENA," Crypto Stream posted, calling ENA their largest position.

OKX and Binance remain the missing integrations. Initial legal issues under the EU's MiCA (Markets in Cryptoassets) framework prevented Binance from listing USDe.

However, ceasing EU user services earlier this month could pave the way for global USDe listing on popular exchanges.

Converge Could Transform Ethena into a Profit-Generating Machine

Although the fee switch will mark an important milestone, some see an even larger reward ahead. Analyst Jacob Canfield pointed out Ethena's long-term plan to launch its blockchain, Converge, with ENA as the protocol token.

In this model, ENA holders can stake tokens for validators and earn a portion of transaction value. This would transform ENA into a yield-generating asset tied to the network's economic activity.

Meanwhile, Ethena's roadmap extends beyond core cryptoasset development. Crypto Stream emphasized StablecoinX (TCO)'s planned Nasdaq listing in Q4, potentially providing institutional investors direct exposure to Ethena's ecosystem.

Circle's previous success with USDC demonstrates significant demand for stablecoin vehicles managed from traditional finance (TradFi).

Meanwhile, Arthur Cheong, founder of DeFiance Capital, believes large funds have underestimated Ethena due to its token lockup schedule.

"You really don't know how many funds... have easily overlooked $ENA just for the simple reason of 'too much unlocking' and missed the growth potential ahead and S-tier execution of the team," Cheong said.

However, despite all this, Ethena's strong rise has reminded many of Terra's UST, which collapsed in 2022.

This occurred after USDe became the third-largest stablecoin following the GENIUS Act's passage. Critics warn that the synthetic stablecoin faces inherent fragility, especially under stressed market conditions.

However, Ethena's founder, Guy Young, countered by highlighting integrated risk control measures and diverse DeFi collateral designed to mitigate devaluation risks.

If Binance or OKX integrate the USDe stablecoin and conversion fees are activated, Ethena could see protocol revenue redirected to ENA holders under favorable macro conditions.

In that scenario, lower Federal Reserve (Fed) rates, typically inversely correlated with cryptoasset funding costs, could boost Ethena's profitability.

Factors may synchronize as USDe acceptance increases, reserves grow, and the Converge chain approaches.

At the time of writing, Ethena is trading at 0.7759 USD, up over 3% in the past 24 hours.