Standard Chartered Projects Ethena's USDe to Surge to $40B, ENA Token to Hit $2
The financial institution anticipates that Ethena's ENA token will climb approximately sevenfold to reach $2 by 2028's conclusion, driven by USDe scaling and accelerating token buyback programs.
Global banking institution Standard Chartered projects that Ethena's USDe stablecoin supply will experience an eightfold expansion to reach $40 billion by 2028's end, driven by the protocol's diversification of yield generation beyond traditional cryptocurrency markets.
According to a research report released on Wednesday and shared with Cointelegraph, the bank launched coverage of Ethena's ENA token with a 2028 year-end price projection of $2, representing approximately seven times the $0.28 price level referenced in the analysis. The bank also anticipates that USDe will marginally exceed the growth rate of the overall stablecoin market during this timeframe.
The bank's projections suggest that ENA would deliver superior returns compared to Bitcoin (BTC) and Ether (ETH) over the period extending through 2028. Standard Chartered's forecasts place BTC at $300,000 and ETH at $18,000 by the conclusion of this timeframe.
According to Standard Chartered, diminishing profitability from USDe's conventional crypto basis trade strategy, which encompasses maintaining spot cryptocurrency positions while establishing short positions in perpetual futures contracts, has motivated Ethena to diversify into decentralized finance and institutional lending markets, real-world assets, and basis trading strategies linked to equities and commodities. These alternative revenue streams are currently producing a combined yield of 5.2%, providing USDe with enhanced capacity for expansion.
The financial institution projects that the overall tokenized assets market will expand from its current level of approximately $350 billion to reach $4 trillion by 2028's conclusion, thereby enlarging the available pool of assets that Ethena could leverage for yield generation purposes.
USDe growth could fuel ENA buybacks
The connection between USDe's expansion and ENA token buyback programs forms the cornerstone of Standard Chartered's valuation argument for the token. A fee transition mechanism that received approval from Ethena governance during early September allocates 95% of net revenue generated from its various business operations toward ENA buybacks once USDe achieves predetermined supply thresholds.
Upon reaching $25 billion in USDe supply, Ethena projects the buyback mechanism could produce $375 million annually in ENA token repurchases, based on assumptions of a 6% gross protocol yield and a 25% net revenue capture rate.
Standard Chartered calculates that should USDe attain its projected $40 billion target while ENA's price stays at current levels, the annual buyback volume could represent approximately 23% of ENA's circulating market capitalization. The financial institution indicated that maintaining such an elevated rate would prove untenable over the long term, leading to expectations that ENA's price will appreciate until buybacks normalize at a more sustainable percentage relative to its market valuation.
The bank drew comparisons to Uniswap, highlighting that UNI's annualized buyback rate has reached equilibrium at approximately 3% to 4% following token price appreciation.
As of Wednesday, ENA was exchanging hands at approximately $0.27, reflecting an increase of roughly 28% during the preceding week and 77% throughout the past month, based on data from CoinGecko. The token commands a market capitalization of approximately $2.65 billion.