Exciting New DeFi Projects on the Ethena Platform to Watch!

The landscape of crypto stablecoins is witnessing the emergence of a new contender: Ethena. Central to its success is USDe, a synthetic dollar that has risen significantly in popularity and performance among the top 100 cryptocurrencies in recent months.

Key Takeaways

Ethena is emerging as a significant player in the stablecoin space with USDe.
USDe is a yield-bearing synthetic dollar, ranking as the third-largest stablecoin by supply.
Terminal Finance, Aave, Pendle Finance, and Term Finance are leading DeFi projects creating a robust ecosystem around USDe.
Each project offers unique features that enhance liquidity, manage risk, and optimize user yields in the Ethena platform.

As you follow these developments, keep an eye on these projects as they contribute to the growth and innovation within the Ethena ecosystem and the broader DeFi landscape.

As of August 2025, USDe's supply had reached around $12 billion, making it the third-largest stablecoin, with approximately 5% of the total market share. Unlike traditional stablecoins like USDC and USDT, USDe offers yield to its users, providing an attractive annual percentage yield (APY) of 9–11% through a delta-neutral strategy that hedges collateral while generating funding yields.

Market cap growth of USDe over the past year (Source: CMC)

This innovative model has drew in numerous users, leading to a near tripling of USDe's supply from mid-2025 to nearly $15 billion by October. This growth is setting the foundation for a vibrant ecosystem around Ethena. Below are four standout DeFi projects within this ecosystem that you should keep an eye on.

1. Terminal Finance

Terminal Finance appears to be on track to become the most promising decentralized exchange (DEX) within Ethena, designed specifically for trading yield-bearing stablecoins (referred to as “reward-bearing dollars”) and institutional assets. Similar to platforms like Uniswap or Curve, Terminal will utilize a concentrated liquidity automated market maker (AMM) model but will be tailored to support assets like sUSDe (staked USDe). It incorporates deeper yield-aware optimizations for enhanced performance.

This exchange will implement concentrated liquidity pools—an adaptation of the AMM model from Uniswap v3—facilitating efficient trading with minimal slippage. What sets Terminal apart is its unique approach to yield accrual in liquidity pools. Typically, adding a yield-bearing asset like sUSDe to a liquidity pool could lead to impermanent loss if the asset's price rises due to earned interest. Terminal addresses this potential issue with a "redeemable token" system. In this system, as liquidity providers deposit sUSDe, the protocol portions it into rUSDe, a token that maintains a fixed value of $1 while periodically minting additional tokens that reflect the earned yield.

In simpler terms, rUSDe serves as a stable representation of sUSDe in the pool, while any yield gained from sUSDe is distributed as new tokens to liquidity providers as dividends. This mechanism effectively separates price from yield, preventing arbitrageurs from depleting the pool as the price of sUSDe increases while ensuring liquidity providers do not face impermanent loss from yield growth.

2. Aave

Recognized globally as a reliable money-market DeFi protocol, Aave welcomed sUSDe (staked USDe) as a collateral asset late last year. This allows holders to deposit sUSDe, borrow other assets against it, and simultaneously continue earning a yield.

As of 2025, more than half of all USDe-related assets have been deposited in Aave's markets, highlighting its significance to Ethena's overall liquidity. Additionally, Aave's risk management features—such as the High Efficiency "E-Mode" for stablecoins—enhance this synergy, permitting a greater borrowing capacity for closely correlated assets, thus making both USDe and other stablecoins more capital-efficient.

3. Pendle Finance

In a world where yield generation is crucial (like the attractive 9-19% APY offered on sUSDe), Pendle provides essential tools for trading and managing these income streams. It does this by splitting an asset like sUSDe into two components: a principal token (PT) representing the original asset and a yield token (YT), which grants the right to future yields.

This structure enables users to explore various strategies. For example, an Ethena user might deposit USDe to obtain sUSDe, then utilize Pendle to split it in a way that allows them to sell the yield token upfront, securing a fixed yield (the PT can later be redeemed 1:1 for sUSDe, typically at a discounted rate that translates to a set APY). Conversely, traders eager for yields can acquire the yield token to profit from the variable interest, taking advantage of potentially higher APYs without liquidation risks since they are not borrowing.

Simply put, Pendle offers users the ability to fix interest rates while also betting on interest rate issues for assets like sUSDe, which is incredibly valuable in environments with fluctuating yields influenced by funding rates and market dynamics. Notably, by mid-September, Pendle's Terminal tUSDe pool had attracted over $230 million, making it the top-yielding USDe market on the platform.

4. Term Finance

Not all lending within DeFi needs to include fluctuating interest rates, which is where Term Finance has found its niche. This protocol specializes in fixed-rate lending and borrowing for cryptocurrencies, integrating USDe to provide fixed-income products accessible to a wide audience.

To explain further, Term employs an auction model to determine fixed interest rates for loans with defined durations. During periodic auctions, lenders and borrowers submit bids, which the protocol matches, establishing a single interest rate applicable to all participants for the specified term. This process eliminates the need for individual negotiations or order books.

Consequently, USDe holders can lend their stablecoins at a fixed annual rate, such as 5% for a 3-month term, while borrowers are assured of the exact interest they'll owe for that period. This approach also avoids slippage or "rate spread" between lenders and borrowers, with the auction mechanism efficiently identifying a single clearing rate, thereby enhancing capital efficiency and transparency.