Can Ethena price reach $2 by 2028?

Standard Chartered has initiated coverage of Ethena’s ENA token with a $2 price target for the end of 2028, putting the bank’s first published valuation at roughly eight times the token’s current market price.

Standard Chartered Global Research said on Sept. 30 that Ethena’s exposure to stablecoins, perpetual futures and tokenization underpins its outlook, while a newly introduced ENA buyback program could allow the token to benefit as those markets grow.

ENA traded near $0.25 on Sept. 30, leaving the cryptocurrency roughly 87% below Standard Chartered’s target. A move to $2 would translate into gains of approximately 700% from that level.

Geoff Kendrick, Standard Chartered’s global head of digital assets research, authored the report and described Ethena as a “scalable yield-bearing stablecoin.” The bank focused much of its investment case on the growth of USDe and the changing mix of assets used to generate returns for the synthetic dollar.

Standard Chartered expects ENA to benefit from three markets

Ethena sits at the intersection of perpetual futures, tokenization and stablecoins, according to Standard Chartered, giving the protocol exposure to three areas the bank expects to grow over the coming years.

USDe remains central to the thesis. Standard Chartered said the synthetic dollar popularized yield-bearing stablecoins after its late 2023 launch and became the fastest stablecoin to reach a $10 billion market capitalization.

Yield-bearing stablecoins currently account for roughly 5% of the stablecoin market, the bank estimated. Standard Chartered expects their share to grow as users seek yield alongside the functions already provided by dollar-linked tokens.

USDe originally generated much of its yield through the crypto basis trade, where Ethena held spot assets while using short perpetual futures positions to hedge price exposure. Standard Chartered said the strategy generated yields above 20% at times.

Ethena has since moved part of USDe’s backing into other sources of returns, reducing its dependence on crypto funding rates.

One part of that strategy involves institutional credit. Ethena and FalconX launched a $1 billion lending facility in August that allows assets backing USDe to finance secured and overcollateralized loans for institutional borrowers.

FalconX originates and services the loans through a special purpose vehicle, while qualified custodians hold collateral worth more than the outstanding loans. Under the structure, institutional lending represented approximately $310 million, or 6.9%, of USDe backing in early July.

Ethena takes the USDe basis trade into equities

Ethena’s expansion beyond cryptocurrency markets forms another part of Standard Chartered’s case as the protocol looks for more places to deploy the strategy behind USDe.

As crypto.news previously reported, Ethena recently expanded its basis trade into tokenized U.S. equities and equity perpetual futures after its Risk Committee approved the framework.

Under the structure, Binance bStocks provide tokenized spot exposure while equity perpetual futures are used for the offsetting position. Binance had more than $2.9 billion in equity perpetual open interest when the plan was announced, while the equity basis had averaged 3.56% annualized over the previous six months.

Ethena Labs founder Guy Young described the move as the “most significant expansion of USDe’s funding mechanism since we started.”

The strategy gives Ethena another market in which it can run the basis trade that originally supported USDe. Ethena expects the opportunity in equity perpetuals to eventually become significantly larger than the corresponding crypto perpetual market.

Standard Chartered tied the expansion to a much larger forecast for tokenized assets. Its research expects real world assets deployed on blockchains to grow from around $40 billion today to $2 trillion by the end of 2028.

Ethena has already started allocating capital toward that market. In June, the company planned a $250 million allocation to Securitize’s tokenized AAA rated collateralized loan obligation fund as the product expanded to Solana.

The fund invests in U.S. dollar denominated AAA rated CLO tranches from primary and secondary markets, with BNY serving as custodian and sub adviser.

ENA buybacks support Standard Chartered’s price case

Changes to ENA’s token economics make up another part of Standard Chartered’s $2 forecast.

Ethena proposed in August that 95% of net revenue generated by its branded businesses be directed toward recurring ENA buybacks once USDe supply reaches a series of predetermined thresholds.

The first threshold is set at $7.5 billion of USDe supply. Unlike an earlier $260 million buyback program that relied on a fixed pool of capital, the proposed structure would connect ENA purchases to recurring net revenue generated by Ethena businesses.

Changes are being made to the token’s supply schedule at the same time. Under the revised ENA arrangements, the Ethena Foundation purchased locked tokens from some large seed investors that had been selling ENA and planned to accelerate the remaining unlocks for original investors.

The changes would bring monthly releases for those investors to an end, while tokens allocated to the Ethena team remain under their existing vesting schedules.

USDe supply will determine when the proposed revenue based purchases begin. The stablecoin remained below $5 billion when the proposal was announced in August after its supply had previously reached a peak near $15 billion.

Institutional infrastructure around ENA has been developing alongside the changes to its token economics. CME Group introduced ENA reference rates in August covering London, New York and Asia Pacific market closes.

CF Benchmarks calculates the rates using transactions from eligible spot exchanges. Published every day, including weekends and holidays, the benchmarks can be used for portfolio valuation, risk management and financial products linked to ENA.

USDe backing has moved beyond crypto funding rates

Ethena’s efforts to find more sources of yield have gradually changed the composition of the assets supporting USDe.

The FalconX facility gave Ethena a route into institutional credit, while the tokenized equity strategy opened another market for its delta neutral trading model. Its planned allocation to tokenized CLOs added exposure to traditional credit markets through blockchain based assets.

USDe’s expansion into new backing strategies has coincided with efforts to give the stablecoin more uses outside trading. Ethena launched the Ethena Pay beta in September, combining self custodial USDe balances with payments and annual reward rates of up to 6%.

Access initially opened to 400 users across eligible markets. Standard membership is free, while higher membership levels require users to lock specified amounts of ENA or meet referral requirements.

Ethena Pay Ltd. states that it is not a bank and that balances are not covered by the Federal Deposit Insurance Corporation or another government backed deposit insurance program.

ENA’s market performance has meanwhile responded to developments around USDe. The token gained 54.1% over the seven days through Sept. 26 as Ethena’s move into tokenized stocks and equity perpetuals drew market attention.

During that move, ENA traded around $0.2756 on Sept. 26 after reaching $0.2807, with the token sitting above its 20 day, 50 day, 100 day and 200 day moving averages.

Standard Chartered expects real world assets deployed on blockchains to grow from around $40 billion to $2 trillion by the end of 2028, the same timeframe covered by Kendrick’s $2 ENA price forecast.