Ethena's ENA token has increased by 47% over the past week, primarily driven by expectations surrounding the activation of a new fee distribution mechanism.
Reasons for ENA Token Growth
According to analysis firm Kairos Research, the rise of ENA is attributed to anticipation around the activation of a fee-sharing mechanism called 'fee-switch.' They report that Ethena has established the necessary technical infrastructure for this system, but certain conditions must be met for activation.
Current Situation in the Ethena Market
The current circulating supply of Ethena's US dollar-pegged stablecoin, USDe, has reached $6.08 billion. Moreover, cumulative revenues of the protocol have surpassed $431 million. However, USDe needs to be traded on at least four out of the top five high-volume derivatives exchanges, whilst currently limited to three.
Investor Outlook and Expectations
Investor interest in the ENA token has surged. The 30-day average annualized return for sUSDe reached 5.59%, and current returns stood at 9.74%. This has attracted institutional investors who are anticipating these returns to become more attractive over time, thereby supporting the recent price increase of ENA.
Thus, the 47% rise in ENA is driven by expectations of fee-sharing system activation and improved market conditions for Ethena.
