ENA explodes 10% as Ethena moves to kill its biggest token overhang

ENA, the native coin of the Ethena ecosystem, is the best performer among the top 50 cryptocurrencies by market cap in the last 24 hours.

The coin is up by 10% since Thursday and is now trading at $0.16 per coin.

The positive performance comes after the Ethena Foundation introduced several measures designed to address persistent concerns surrounding its ecosystem, including selling pressure from early investors and uncertainty over how the protocol’s economic value is distributed.

The changes include repurchasing locked tokens from some seed investors, accelerating the remaining investor unlock schedule and proposing a revenue-funded ENA buyback program.

Technical indicators show that ENA has entered the overbought territory. However, it could extend its rally in the near term or undergo a correction. 

Ethena tackles investor unlock pressure

In a Thursday blog post, the Ethena Foundation said it had repurchased locked ENA tokens from certain major seed investors and accelerated the remaining investor unlock schedule.

Ethena completed the purchases through over-the-counter transactions during the previous two weeks.

The process covered investors who had originally received allocations representing more than 0.25% of ENA’s total supply.

The Foundation divided the affected investors into two groups.

The first consisted of investors who had sold at least one ENA token following the market cycle peak on October 10. The second included investors who had not sold any tokens during that period.

Investors in the second group were offered the opportunity to sell their tokens to the Foundation without a discount. However, none accepted the offer.

Ethena subsequently purchased all unvested tokens belonging to investors in the first group, except those associated with one wallet that declined to participate.

“The market for ENA should no longer be impacted by monthly investor unlocks,” the Foundation said.

The changes do not affect tokens allocated to Ethena team members, which will remain locked according to their original vesting schedules.

Following the transactions, approximately 12% of ENA’s supply remains locked and unvested. Ethena said those tokens relate exclusively to team, ecosystem and Foundation allocations.

The restructuring could reduce the supply overhang created by recurring investor unlocks while preserving the long-term vesting requirements imposed on insiders and ecosystem stakeholders.

Ethena Foundation gains protocol economic rights

Alongside the token repurchases, the Ethena Foundation and Ethena Labs reached a Master Framework Agreement covering the protocol’s intellectual property and economic benefits.

Under the proposed framework, substantially all material intellectual property connected to the Ethena Protocol would be exclusively licensed to the Foundation and its ecosystem.

The agreement also provides that economic upside, residual profits and potential proceeds from any future sale of the underlying business would accrue to the Foundation and ecosystem rather than Ethena Labs shareholders.

“The equity holders of Ethena Labs are due no residual cash flow or profit from the protocol,” Ethena said.

The arrangement seeks to establish a clearer distinction between private equity ownership in Ethena Labs and the economic value generated by the decentralized protocol.

Ethena has also introduced a governance proposal to activate and expand the parameters of its ENA fee switch. The implementation vote is now live.

Developed in collaboration with the Ethena Risk Committee, the proposal establishes supply-based milestones that determine how much protocol revenue will be allocated to ENA buybacks.

The percentage directed toward purchases would increase as USDe’s circulating supply reaches successive targets. This structure ties ENA demand more closely to the growth and financial performance of the Ethena ecosystem.

Ethena technical outlook: Will ENA extend rally towards $0.20?

ENA responded positively to the proposed changes, rising 10% over the previous 24 hours to trade at approximately $0.160 at the time of writing.

The rally suggests that investors welcomed the reduction in potential selling pressure and the proposed creation of a recurring revenue-funded source of demand for ENA.

The technical indicators are bullish, suggesting that the buyers are firmly in control. The RSI of 71 means that ENA has entered the overbought territory, which could result in a retracement in the near term.

The MACD lines are also deep within the positive region, adding further confluence to the bullish narrative.

If the buyers continue to stay in control, ENA could hit the $0.20 psychological level for the first time since January 28. 

An extended rally would allow the bulls to target the $0.257 swing high on the 4-hour timeframe. 

However, if the token undergoes a correction, it could retest the Wednesday low of $0.135. An extended correction could see it drop towards the $0.116 support level.