USDe collaborates with Aave to launch high-yield stake activities, attracting market follow

Since 2024, the stablecoin market has been undergoing a new change driven by structural innovation. After years of fiat-backed stablecoins dominating the market, USDe, launched by Ethena Labs, has rapidly risen with its "no fiat support" synthetic stablecoin design, reaching a market cap of over $8 billion at one point, becoming the "high-yield dollar" in the DeFi world.

Recently, the Liquid Leverage stake activity launched by Ethena in collaboration with a lending platform has sparked heated discussions in the market: an annualized return of nearly 50%, which on the surface seems like a usual incentive strategy, but perhaps also reveals another signal worth following—the structural liquidity pressure that the USDe model bears during the ETH bull market.

This article will focus on the incentive activity, briefly explaining USDe/sUSDe and related platforms. It will analyze the underlying systemic challenges from the perspectives of profit structure, user behavior, and capital flow, and compare historical cases to explore whether future mechanisms have sufficient resilience to cope with extreme market situations.

1. Introduction to USDe and sUSDe: A synthetic stablecoin based on cryptographic native mechanisms

USDe is a synthetic stablecoin launched by Ethena Labs in 2024, designed to avoid reliance on the traditional banking system and fiat currency issuance. As of now, its circulation scale has exceeded 8 billion USD. Unlike stablecoins backed by fiat reserves, USDe's anchoring mechanism relies on on-chain crypto assets, particularly ETH and its derived staking assets (such as stETH, WBETH, etc.).

Its core mechanism is the "delta neutral" structure: the protocol holds positions in assets such as ETH on one hand, and opens equivalent perpetual short positions for ETH on centralized derivatives trading platforms on the other hand. By using a hedged combination of spot and derivatives, USDe achieves a net asset exposure close to zero, thereby stabilizing its price around 1 USD.

sUSDe is a representative token obtained by users after staking USDe to the protocol, featuring automatic accumulation of returns. Its sources of income mainly include returns from the funding rate in ETH perpetual contracts and derivative income generated by the underlying staked assets. This model aims to introduce a sustainable revenue model for stablecoins while maintaining their price anchoring mechanism.

2. The Cooperative System of Lending Agreement and Incentive Distribution Mechanism

A certain lending platform is one of the oldest and most widely used decentralized lending protocols in the Ethereum ecosystem, dating back to 2017. It promoted the popularity of DeFi lending systems in the early days through the "flash loan" mechanism and a flexible interest rate model. Users can deposit crypto assets into the protocol to earn interest or borrow other tokens by collateralizing their assets, all without intermediaries. Currently, the total value locked (TVL) in the protocol is approximately $34 billion, with nearly 90% deployed on the Ethereum mainnet.

A certain incentive distribution platform provides programmable and conditional incentive tools for DeFi protocols. By setting parameters such as asset type, holding duration, and liquidity contribution, the protocol party can precisely establish reward strategies and efficiently complete the distribution process. To date, the platform has served over 150 projects and on-chain protocols, with a total distributed incentive amount exceeding 200 million USD, supporting multiple public chain networks including Ethereum, Arbitrum, and Optimism.

In this USDe incentive event jointly initiated by Ethena and a lending platform, the lending platform is responsible for organizing the lending market, configuring parameters, and matching stake assets, while the incentive distribution platform is responsible for setting the reward logic and performing on-chain distribution operations.

III. Analysis of the Source Mechanism for 50% Annualized Returns

On July 29, 2025, Ethena Labs officially announced the launch of a feature module called "Liquid Leverage" on a certain lending platform. This mechanism requires users to deposit sUSDe and USDe into the lending protocol at a 1:1 ratio, forming a compound staking structure, and in return, gain additional incentive rewards.

Specifically, qualified users can obtain three sources of income:

1. The incentive USDe rewards automatically distributed by the incentive distribution platform (currently about 12% annualized);
2. The protocol yield represented by sUSDe, which comes from the funding fees of the delta-neutral strategy behind USDe and the stake yield;
3. The basic deposit interest of the lending platform depends on the current market capital utilization rate and the demand of the pool.

The specific participation process for this event is as follows:

1. Users can obtain USDe through the Ethena official website or decentralized exchanges;
2. Stake the USDe you hold on the Ethena platform to exchange for sUSDe;
3. Transfer an equal amount of USDe and sUSDe to the lending platform at a ratio of 1:1;
4. Enable the "Use as Collateral" option on the lending platform page;
5. After the system detects compliant operations, the incentive distribution platform automatically identifies the address and regularly distributes rewards.

Official data, disassembly of underlying computing logic:

Assumption: $10,000 principal, 5x leverage, a total of $40,000 borrowed, with $25,000 respectively pledged as collateral for USDe and sUSDe.

| Revenue/Cost Category | Source | Calculation Formula | Annual Revenue Amount | |---------------|--------------------------|----------------------|------------| | Protocol Incentive Earnings | sUSDe Protocol Earnings + USDe Incentives | 25,000 × 12% × 2 | $5,975 | | Lending Interest Income | Interest earned from USDe deposit Lend | 25,000 × 3.55% | $890 | | Lending interest cost | Borrowing USDT annual interest expense | 40,000 × 4.69% | $1,876 | | Total Net Income | - | 5,975 + 890 - 1,876 | $4,989 |

Leverage Structure Description:

The premise of this yield relies on the compound structure established by the "lending - deposit - continue lending" cycle, where the initial principal is used as the first round of stake, then the borrowed funds are used for the next round of bidirectional deposits of USDe and sUSDe. By amplifying the stake position with 5x leverage, the total investment reaches 50,000 USD, thereby increasing rewards and base yield.

4. Does the incentive plan reveal structural difficulties faced by USDe?

Despite the fact that USDe maintains its peg through a delta-neutral structure, its historical price has generally fluctuated around $1 without serious deviations, nor has it encountered a liquidity crisis similar to those that rely on liquidity incentives to restore prices. However, this does not mean that USDe is completely immune to risks; the hedging model itself has potential vulnerabilities, especially during periods of extreme market volatility or when external incentives are withdrawn, which may lead to stability shocks.

The specific risks are reflected in the following two aspects:

1. The funding rate is negative, and the protocol yield declines or even turns negative:

The main income of sUSDe comes from the LST earnings obtained from staked assets such as ETH, along with the positive funding rate established on centralized derivative platforms for ETH short perpetual contracts. The current market sentiment is positive, with long positions paying interest to short positions, maintaining a positive yield. However, once the market turns weak, with an increase in short positions and a negative funding rate, the protocol will need to pay additional costs to maintain hedge positions, leading to a reduction in earnings, or even a negative value. Although Ethena has an insurance fund buffer, whether it can cover negative yields in the long term remains uncertain.

2. Incentive Termination → Promotional Rate 12% earnings will disappear directly:

The Liquid Leverage activities currently executed on the lending platform are limited-time offers providing additional USDe rewards (annualized at approximately 12%). Once the incentives end, the actual returns held by users will revert to the native sUSDe yields (funding fees + LST yields) along with the lending platform's deposit interest rates, potentially decreasing to the range of 15-20%. In a high leverage structure (such as 5x), the USDT borrowing rate (currently at 4.69%) will further compress the yield space. In more severe cases, in an extreme environment where funding is negative and interest rates are rising, users' net yields may be completely eroded or even turned negative.

If the incentives cease, ETH declines, and the funding rate turns negative simultaneously, the delta-neutral yield mechanism relied upon by the USDe model will be substantially impacted, and the sUSDe yield may drop to zero or even turn negative. If this is accompanied by a large number of redemptions and selling pressure, the price anchoring mechanism of USDe will also face challenges. This "multiple negative overlay" constitutes the most critical systemic risk in Ethena's current architecture and may also be the underlying cause behind its recent high-intensity incentive activities.

5. Will the Ethereum price increase stabilize the structure?

Due to the stability mechanism of USDe relying on the spot staking and derivatives hedging of Ethereum assets, its fund pool structure faces systemic drainage pressure during rapid ETH price increases. Specifically, when the ETH price approaches market expected highs, users often tend to redeem staked assets early to realize profits or shift to other assets with higher returns. This behavior has spawned a typical "ETH bull market → LST outflow → USDe contraction" chain reaction.

From the data, it can be observed that the TVL of USDe and sUSDe declined simultaneously during the peak of ETH prices in June 2025, and there was no increase in annualized yield (APY) accompanying the price rise. This phenomenon contrasts with the previous bull market (end of 2024): at that time, after ETH reached its peak, the TVL gradually fell back, but the process was relatively slow, and users did not collectively redeem their staked assets prematurely.

In the current period, TVL and APY are declining in sync, reflecting an increased concern among market participants about the sustainability of sUSDe yields. When price fluctuations and changes in funding costs pose potential negative yield risks to delta-neutral models, user behavior shows higher sensitivity and response speed, with early exit becoming the mainstream choice. This phenomenon of capital withdrawal not only weakens the expansion capability of USDe but also further amplifies its passive contraction characteristics during the ETH bullish cycle.

Summary

In summary, the current annualized return of up to 50% is not a normal state of the protocol, but rather a result of multiple external incentives at different stages. Once risk factors such as high volatility in ETH prices, termination of incentives, and negative funding rates are concentrated and released, the delta-neutral yield structure that the USDe model relies on will come under pressure, and sUSDe yields may quickly converge to 0 or turn negative, thereby impacting the stability anchoring mechanism.

Recent data indicates that the TVL of USDe and sUSDe has declined simultaneously during the ETH uptrend, and the APY has not increased correspondingly. This "extraction during the rise" phenomenon shows that market confidence is beginning to price in risks in advance. The current liquidity of USDe is stable, largely relying on ongoing subsidy and maintenance strategies.

When this incentive game will end, and whether it can secure enough structural resilience adjustment windows for the protocol, may become the key test of whether USDe truly has the potential to be the "third pole of stablecoins."