Ethena launches a beta version of Ethena Pay on the Avalanche platform with savings interest rates

Ethena Labs has launched the beta version of Ethena Pay, a self-managed consumer finance app built on the Avalanche platform as its proprietary payment layer.

9/1/20264 min read

Read the interest rate structure carefully.

The figures circulating in the media necessitate a precise understanding of tier and limit conditions. The 6% savings interest rate is not applicable to all balances; it applies to Pro and VIP tiers with balance limits of $15,000 and $50,000 respectively. Above these levels, higher interest rates are likely not applicable. Standard users receive 5% on balances up to $5,000.

The cashback structure also follows a similar hierarchical and limited logic. The base cashback is 4% for standard users, 4.5% for professional users, and 5% for VIP users, each only applicable to a monthly spending threshold: $2,500 for standard users, $8,000 for professional users, and $20,000 for VIP users. Ethana's official launch post and legal pricing page advertise cashback up to 5% instead of the 10% figure appearing in some media, with the 10% only applicable to VIP users at specific commercial partners and not as a general rate.

Ethana founder Guy Young revealed that the USDe base interest rate funds the savings yield, but declined to disclose the funding source for the remaining rewards, including the cashback program. This information gap is crucial for assessing the program's sustainability: a savings interest rate of 5-6% combined with a cashback of 4-5% far exceeds what the USDe yield can support in the current market environment, meaning a subsidized reward from an undisclosed source—potentially protocol revenue, fund allocations, or partner marketing agreements—needs to be maintained or replaced once the user base exceeds 400 users during the beta testing phase.

The publisher owns the platform.

Young's description of Ethena Pay as the first vertically integrated digital banking app with the stablecoin issuer's own product highlights a structural characteristic that distinguishes it from other digital banks operating on cryptocurrency platforms, which transfer customer balances via USDC or USDT. When a digital bank builds on a third-party stablecoin platform, the yield the digital bank can offer is limited by the amount paid by the stablecoin issuer, and the economic benefits of the deal are shared between the issuer, which earns reserve income, and the digital bank, which earns distribution fees.

Ethena controls both layers: it issues USDe, generates yields through a delta-neutral hedging strategy and an increasingly diversified supporting portfolio, and now operates a consumer application through which USDe reaches end users. This integration allows Ethena to set consumer-facing rates based on its entire economic returns rather than negotiating a share of other issuer's reserve income, and creates a direct distribution channel for USDe use without relying on exchange listings, DeFi protocol integration, or third-party wallet support.

The strategic consequence for Ethena is a shift in the demand base for USDe. In the past, USDe was primarily used by participants in exchanges, DeFi protocols, and cryptocurrency-focused trading strategies, where its yield made it attractive as a dollar-denominated position. Ethena Pay attempts to expand that demand to include everyday saving, spending, and transferring funds between users not yet involved in DeFi, a demographic that Young has clearly identified as a target: not necessarily those already using DeFi wallets and protocols.

Why are the biggest markets being excluded?

The exclusion of the United States, the European Union, the United Kingdom, Canada, and South Korea from the initial rollout across 48 countries reflects the regulatory constraints that USDe faces in those jurisdictions, rather than a decision prioritizing market access.

The German financial regulator BaFin ordered Ethena GmbH to cease its USDe trading operations by June 2025 after the company withdrew its application for a license under the European Union's MiCA framework, citing that the USDe structure was incompatible with the asset-referenced tokens or cryptocurrency tokens permitted by BaFin. That precedent closed the EU market to USDe distribution.

In the United States, the GENIUS Act's payment stablecoin framework prohibits interest-bearing payment stablecoins, creating a direct conflict with a product whose core proposition is a 5- to 6% savings rate on stablecoin balances. Whether USDe should be classified as a prohibited payment stablecoin or as a separate instrument outside the scope of the GENIUS Act is precisely the kind of classification question that the SEC's proposed Crypto Asset Regulation and the pending CLARITY Act need to address before a US launch becomes feasible.

The exclusion of South Korea may reflect the country's Digital Assets Basic Act framework, which is nearing passage in the second half of 2026 along with stricter regulations on foreign-issued stablecoins, while the exclusion of the UK and Canada reflects the ongoing development of each country's cryptocurrency legal framework.

Assessment and Conclusion

The viability of Ethena Pay depends significantly on the ability of USDe to sustain yields to fund savings interest, and that yield model has been evolving. In the past, USDe maintained a fixed rate against the dollar through a delta-neutral strategy, combining spot ETH and BTC holdings with perpetual short futures positions, generating yields from perpetual funding interest paid by buyers to short sellers under favorable funding conditions.

That model generates annual returns ranging from 4% to over 35% depending on funding interest rate conditions, with the highest returns in bull markets when leveraged demand pushes funding interest rates up and the lowest in bear markets and sideways periods when funding is tight. The 2026 bear market is precisely the environment in which the arbitrage trading model generates the weakest returns.

Ethena responded by diversifying its USDe-backed portfolio across loans, real assets, stablecoins, and non-cryptocurrency arbitrage opportunities, and announced plans last week ahead of the launch of Ethena Pay to add perpetual arbitrage opportunities linked to equities as an additional yield source, although that rollout has yet to begin. This diversification reduces USDe's reliance on cryptocurrency-backed interest rates in particular, but creates new types of risk, including credit risk from lending and counterparty risk from risky asset positions (RWA).

Disclaimer: The content in this article is for informational, research, data analysis, and reference purposes only regarding the cryptocurrency market. All opinions, assessments, forecasts, or opinions reflect the author's perspective at the time of publication and do not constitute investment advice, solicitations for buying or selling, trading recommendations, advertising, marketing, or promotion of any financial products, services, or cryptocurrencies. Mentions of projects, tokens, protocols, exchanges, wallets, or cryptocurrency service providers (CASPs) are for research, analysis, or informational purposes only and should not be construed as endorsements, recommendations, or guarantees in any way. HCCVenture does not broker, advertise, market, promote, or connect users in Vietnam with any cryptocurrency services from CASPs. HCCVenture does not accept asset custody, investment mandates, manage assets, or execute transactions on behalf of clients. All investment decisions are made entirely through the reader's own research (DYOR), evaluation, and responsibility; HCCVenture is not liable for any losses or damages arising from the use of or reliance on the information presented in this article.

Compiled and analyzed by HCCVenture

Join our information channels: https://link3.to/holdcoincventure

Explore HCCVenture group

Connect with us

Disclaimer: The information on this website is for informational purposes only and should not be considered investment advice. We are not responsible for any risks or losses arising from investment decisions based on the content here.

TERMS AND CONDITIONS • CUSTOMER PROTECTION POLICY

ANALYTICAL AND NEWS CONTENT IS COMPILED AND PROVIDED BY EXPERTS IN THE FIELD OF DIGITAL FINANCE AND BLOCKCHAIN BELONGING TO HCCVENTURE ORGANIZATION, INCLUDING OWNERSHIP OF THE CONTENT.

RESPONSIBLE FOR MANAGING ALL CONTENT AND ANALYSIS: HCCVENTURE FOUNDER - TRUONG MINH HUY

Read warnings about scams and phishing emails — REPORT A PROBLEM WITH OUR SITE.