Ethena deep dive: why USDe retains capital (A1 Research report)
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TL;DR of the A1 Research Ethena report: about 70% share of yield-bearing synthetic dollars, 76% capital retention (above 85% under stress) and nearly all yield passed to USDe holders. Argues Ethereum-only concentrated liquidity beats multi-chain spread.
Key claims
Ethena holds ~70% category share and is nearly 9x its closest rival
Capital retention 76% overall, above 85% in market stress
Passes nearly 100% of yield (over $400M) to USDe holders
With @a1research__, we recently did a deep dive report on @ethena and its $USDe stablecoin, which I highly recommend to check out.
TL;DR on the determinant behind Ethena's strong capital retention rate:
➤ Category Creator & Dominator:
Ethena established and now dominates the yield-bearing synthetic dollar category, commanding ~70% market share. This is a rare case of category creation, not just competition, resulting in an extreme power-law distribution where it's nearly 9x larger than its closest rival.
➤ Proven Infrastructure-Grade Resilience:
The protocol exhibits exceptional capital retention (76% overall, >85% during market stress) and the lowest volatility (8.23 score) among major DeFi peers. It consistently outperforms giants like Aave, Lido, and restaking protocols in retaining capital and recovering faster during drawdowns, proving its design is trusted in a crisis.
➤ "Utility Over Extraction" Economic Model:
Ethena's core strength is its economic design. It intentionally sacrifices protocol revenue by passing nearly 100% of yield generated (over $400M+) directly to $USDe holders. This fosters immense capital stickiness and user trust, creating a powerful defensive moat.
➤ Concentrated Liquidity Thesis:
By remaining exclusively on Ethereum, Ethena challenges the "multi-chain" narrative. Its success proves that for foundational financial primitives, deep, concentrated liquidity on a single chain can be far more powerful and capital-efficient than fragmented, multi-chain expansion.
➤ Future Role as Foundational Collateral:
With its unique combination of stability, yield, and trust, Ethena is strategically positioned to become a core collateral asset for the massive ($13.6B+/day) and rapidly growing decentralized derivatives market.
Read the full article here! ↓
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