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Ethena (ENA) Crypto Asset Statement

Ethena (ENA) Crypto Asset Statement

PLEASE READ THIS CAREFULLY. BY PROCEEDING TO TRANSACT IN ENA, YOU ACKNOWLEDGE AND ACCEPT THE STATEMENTS SET OUT BELOW.

About this Summary

Ndax Canada Inc. (“Ndax”, “we” and “our”) believes that our users should understand the crypto assets that they are able to trade and stake using our crypto trading platform (the “Platform”). One of the crypto assets we offer on the Platform is ENA. We created this summary to help you understand the basics of ENA as well as some of the risks involved in trading in ENA. While we tried to describe the key features of ENA, this summary isn’t meant to tell you everything you’d want to know before investing in ENA. You should also do your own research on ENA to make sure you are comfortable investing in it.

Description of ENA

History of ENA

Ethena Labs introduced ENA in March 2024 alongside USDe, a synthetic dollar that is over-collateralised with ETH-based derivatives. After a record-setting airdrop to early USDe users, ENA went live on Ethereum as an ERC-20 token with a hard-cap of 15 billion. Governance of protocol fees, risk parameters and future product lines shifted to ENA holders via on-chain voting shortly after launch.

What is ENA used for

ENA is the native governance and incentive token of Ethena. Holders can vote on treasury management, collateral ratios and oracle upgrades,  stake ENA to earn a share of protocol revenue, and supply liquidity in designated pools to earn emissions that deepen USDe market depth.

How ENA works

ENA underpins Ethena’s synthetic-dollar ecosystem by serving as the protocol’s governance, incentives, and safety-backstop token. When users lock ENA into the staking contract they receive sENA, which confers voting rights over key risk parameters—such as collateral composition, maximum leverage, and yield-distribution policies—allowing the community to steer how the USDe stablecoin is managed. Staked ENA simultaneously forms an insurance fund: in the unlikely event that the delta-neutral hedge underlying USDe suffers a shortfall, a portion of this pool can be liquidated to recapitalize the system, aligning token-holder incentives with prudent risk management. In return for bearing this residual risk, sENA holders earn a share of the protocol’s real revenue, which is generated by combining staking yields on ETH-based collateral with funding-rate income from offsetting short perpetual positions; those earnings are periodically routed to the staking contract and claimable by participants. ENA has a fixed supply of 15 billion tokens, released on a long-term schedule that allocates emissions to community incentives and contributor grants, while the circulating float gradually expands as vesting cliffs unlock. Together, this design gives ENA tangible cash-flow rights, direct influence over the core stablecoin engine, and a clearly defined role in safeguarding the economic health of Ethena.

Risks

Before entering into an agreement (a “Crypto Contract”) with Ndax to buy or sell any crypto assets through the Platform, it is important to understand the risks. This overview is a starting point for you to perform your own research prior to investing in a crypto asset.

Like other crypto assets, there are some general risks associated with investing in ENA. Each of these risks are described in more detail in the Risk Statement provided to you at the time that you open your account with us and is also available online on the Ndax website and app. You should review the Risk Statement.

In addition to the general risks set out in the Risk Statement, we also point out other specific risks to ENA below. Ethena’s two-token design (USDe + ENA) introduces risks that differ materially from most stable-asset ecosystems and merit extra attention:

  • Funding-Rate Dependence – USDe maintains its soft peg via delta-neutral hedges that short ETH perpetual futures. The strategy works only while cumulative funding payments on those shorts stay positive or modestly negative; a prolonged stretch of deeply negative funding (e.g., during a sharp market draw-down) would drain the protocol’s yield and could force it to dip into insurance reserves or principal collateral, pressuring the peg and ENA’s value.
  • Insurance-Fund Adequacy – Ethena operates a dedicated reserve that can be tapped when funding costs exceed staking yield. Although sizeable today, the reserve is finite; a “black-swan” event combining severe negative funding, rapid ETH price swings and liquidity crunch could exhaust the fund before governance can react, exposing ENA holders to dilution if new ENA had to be minted to recapitalize the system.
  • Exchange & Counter-party Concentration – Most hedges sit on a handful of centralised derivatives venues (Binance, Bybit, OKX). If any major venue suddenly tightened leverage, hiked haircuts or experienced downtime, Ethena’s ability to rebalance could be impaired, triggering forced unwind of positions and destabilising USDe – with knock-on effects for ENA.
  • Liquidity & Redemption Bottlenecks – USDe redemptions rely on sufficient on-chain liquidity and order-book depth for the paired hedges. In stressed markets, slippage or pool imbalances could widen, delaying redemptions and fuelling a discount that undermines confidence in both USDe and ENA.
  • Smart-Contract & Oracle Risk – Core vault, minting and oracle contracts are new and bespoke; undiscovered bugs or oracle manipulation (e.g., extreme wETH price divergence) could lead to incorrect collateral ratios or inadvertent over-minting, forcing emergency governance actions or prompting ENA dilution to cover losses.
  • Governance & Token-Supply Overhang – ENA’s 15 billion max supply releases over several years; large cliff unlocks for investors, team and ecosystem funds could introduce sustained sell-pressure, especially if protocol revenue lags projections. Concentrated voting power among early insiders also raises the prospect of governance decisions that favour insiders over the broader holder base.
  • Peg-Break Reflexivity – If USDe trades persistently below $1, arbitrage relies on burning USDe for ETH, closing hedges and possibly selling ENA-rewards. Should market faith erode, a reflexive loop of redemptions and selling could trigger a “death-spiral” dynamic reminiscent, even though Ethena’s mechanism differs (collateralised vs zero-reserve).
  • Inter-protocol Contagion – Ecosystem are integrating USDe and veENA gauges. A failure in any major integrated protocol, or cascading liquidations in Pendle yield markets, could transmit stress back to Ethena, amplifying volatility in ENA.

 

While we have tried to describe the key risks associated with ENA here and in our Risk Statement, we emphasize that this Crypto Asset Statement is not exhaustive of all of the risks associated with trading in ENA. You should also do your own research on ENA to make sure you are comfortable investing in such a crypto asset.

Regulatory Information 

Ndax is a registered investment dealer under securities legislation in all provinces and territories of Canada, and is a member of the Canadian Investment Regulatory Organization (CIRO) and of the Canadian Investor Protection Fund (CIPF). Ndax is offering Crypto Contracts in accordance with the terms of the Decision Document dated December 19, 2024 that we entered into with the Canadian securities regulators.  Any fiat currency held in user's accounts are protected by the CIPF's Investment Dealer Fund in accordance with its Coverage Policy. However, CIPF coverage does not extend to any virtual assets held in user's accounts. These assets are not eligible for deposit insurance or any protection from the Canada Deposit Insurance Corporation (CDIC) or CIPF.

The statutory rights of action for damages and the right of rescission in the securities legislation of each province and territory of Canada would not apply in respect of a misrepresentation in this Crypto Asset Statement.

Prior to offering a Crypto Contract on ENA, Ndax assesses whether ENA is a security and/or a derivative under the securities and derivatives laws of Canada. Ndax’s assessment includes a review of the history of ENA (such as how it was created and its governance structure), its characteristics, its market capitalization and any regulatory concern regarding ENA. Based on its assessment, Ndax concluded that ENA is not a security or a derivative. However, there is a risk that this conclusion could change in the future. In that case, Ndax may be required to halt or withdraw ENA from trading on the Platform and stop any future trading of Crypto Contracts based on ENA, and users holding ENA may be required to liquidate their positions, potentially at a significant loss. In this event, users holding positions in ENA will be notified via the Platform or other electronic means and advised of the options available to them and any applicable period to sell or withdraw their positions in ENA.

No Canadian securities regulatory authority has expressed an opinion about ENA, including an opinion that ENA is not itself a security and/or derivative.

 

Last Updated: 6/6/2025