The transaction fee switch will be activated, and ENA will undergo a reassessment.

Written by: Joe Cho, Carlos

Translated by: AididiaoJP, Foresight News

In the past few months, one of the most anticipated opportunities in the crypto market is neither a new public chain nor a new round of meme coins, but rather "new banks." Stablecoins integrate dollar accounts, cross-border transfers, savings, and daily consumption into the same track, and products can be available to global users from day one without the need for licenses in each country.

The data also supports this judgment. Tracked crypto card consumption reached a record of $283 million in the first week of September, with a year-on-year growth of over 200%. This indicates that this track is no longer a concept, but real transactions are occurring.

Ethena's entry method is different from most peers.

Funds deposited, reserve income belongs to the protocol

Common accounts in crypto new banks hold USDC or USDT. The interest generated from reserves primarily goes to Circle or Tether. How do frontend companies survive? Mainly through card transaction sharing, cashback to acquire customers, and gradually guiding users towards lending, trading, and subscriptions. But the problem is that customer acquisition is costly, and cashback often erodes card transaction income. They cannot access the most stable income from interest.

Ethena Pay changes this equation. Once funds are deposited into an account, they will be converted into USDe. From the first deposit by customers, the underlying reserve income belongs to Ethena. It does not need a banking license, nor does it have to share the reserve income of USDe with sponsor banks. After deducting user earnings and operational costs, the remaining portion can be used to lower fees, increase rewards, and support product iterations.

This logic is not new in traditional financial technology. Net interest income accounts for about 34% of Robinhood's revenue by 2025, and about 22% of Revolut's revenue. For them, interest is no longer a fringe income, but one of their main businesses. Ethena essentially locks in this portion of revenue into its own model.

In other words, other platforms spend money to acquire users first and then look for monetization paths; Ethena allows users' balances themselves to generate income for the protocol. The larger the balance, the more stable the foundation.

Products are still in early stages, competitors are ahead

A beautiful economic model does not equal a winning product.

Ethena Pay recorded a card transaction volume of $250,000 last week, with 456 accounts that have deposited a total balance of $4.3 million. The numbers are not large, but they need to be understood in the context of an invitation-only system. The gateway is not fully open, so the transaction volume is naturally limited. Once the invitation is lifted and regions are expanded, activity is expected to increase.

The comparison is also straightforward. EtherFi's weekly card consumption has reached about $30 million, a difference of one order of magnitude. Industry players like RedotPay and KAST have also progressed further. Ethena is now competing not on "whether there is a card" but on whether the card is user-friendly, whether the rewards are attractive enough, whether deposits and withdrawals are smooth, and whether users are willing to keep their funds long-term.

The product side already reveals its intentions: self-custodial wallets, automatic conversion of balances to USDe, Visa consumption, cashback, and boosting savings rates to competitive levels. Standard, Pro, and VIP tiers are offered; locking ENA or attracting new users can grant upgrades. The direction is clear, but it is still in its early stages. The invitation system, regional restrictions, and the rollout for Android and Europe are all real constraints.

There is only one thing that really needs to be validated: whether richer reserve income can be translated into user-perceived low fees, high rewards, and a quality experience. If the advantages of the model only exist in tables, they are meaningless.

Pay and USDe as a flywheel

Viewing Ethena Pay merely as a card will narrow its significance.

New funds entering new banks will create demand for USDe; as the scale of USDe increases, reserve income will grow, which can further enhance Pay's pricing and rewards. One end pulls in users, while the other nurtures stability in stablecoin supply, with both reinforcing each other.

If users leave after using the card just once, the significance is limited. The key is retaining the balance. If the balance is retained, reserve income can be sustained, Pay can afford the subsidies, and the demand for USDe will not be one-off. Therefore, what needs to be monitored next is not just the weekly transaction volume, but also the number of funded accounts, average balances, retention rates, and whether these figures can rise together after the invitation system opens up.

The supply of USDe has returned to $4.6 billion after six consecutive weeks of net inflow. It landed on TRON last week, and distribution channels continue to expand. Supply is recovering, and distribution is widening. If Pay can become a new funding entry point, it will be an incremental addition to the supply side, rather than just transferring existing users.

Transaction fee switch approved, buyback still has thresholds

Another line is ENA.

The transaction fee switch has been approved. The buyback plan will be initiated once USDe supply reaches $7.5 billion, binding protocol revenue with token demand. This is a long-awaited step for holders: the protocol earns money and starts buying tokens.

But the threshold is not low. The supply needs to rise from $4.6 billion to $7.5 billion. The switch does not mean "full allocation once opened," but will progress incrementally with the scale of USDe. The portion entering the buyback pool comes from the net income across all business lines that belong to the foundation, with about 95% allocated for programmatic buybacks of ENA, while the rest is reserved for growth. If Pay is successful, theoretically, this income could enter the revenue account, but with the current scale, it still cannot support a grand narrative.

Ethena has also bought back some shares from early investors to alleviate VC sell pressure. Unlocking and addressing early stakes has always been a shadow over ENA's valuation. The buyback of some early positions and linking income with tokens is clear in its intention: to first relieve supply-side pressure, and then allow the fundamentals a chance to match the prices.

These factors combined create a window for reassessment, but the window does not mean the reassessment has been completed. Until the supply reaches $7.5 billion, the buyback remains an expectation; Pay is still in the invitation-only phase, and the consumer finance narrative is still a work in progress. It is essential to observe whether the two curves can rise in sync: whether the supply of USDe is approaching $7.5 billion, and whether Pay's balances and consumption are continuously increasing.

Current perspectives on ENA

Putting three things on the table, the logic is actually clear.

• First, Ethena's reserve income does not need to be shared with the issuer or sponsor banks, which is a structural advantage compared to USDC/USDT new banks.
• Second, advantages must translate into product strength; the current gap remains, with EtherFi reaching weekly consumption in the tens of millions of dollars.
• Third, the transaction fee switch will connect the token with protocol income, but the first tier of buyback must wait for USDe to reach $7.5 billion; the early position buyback is merely to ease selling pressure and does not represent a fundamental change.

Thus, this is not a story of "the price will rise as soon as the card is launched," but rather a closed loop that is still being validated: deposits convert to USDe, USDe generates reserve income, income subsidizes Pay, and Pay feeds back into USDe. Once any link in the loop breaks, the narrative will weaken.

Once the invitation system opens, the first thing that can be verified or falsified is whether balances and consumption can be scaled. That will be the boundary from a model prototype to a true business for Pay.