Reserve Fund

Additional margin of safety

The reserve fund acts as an additional margin of safety behind USDe to provide a source of capital to pay for periods of negative funding, as well as a bidder of last resort for USDe in open markets.

Composition of Reserve Fund

Stable uncorrelated collateral to cover funding payments in same currency denomination:

  • Stablecoin assets including USDC and USDT for USD-M contracts

  • Smaller ETH collateral allocation for ETH-M contracts

  • Other assets as determined by governance

Security of Reserve Funds

Controlled by 4/8 multi-sig with keys held by contributors sitting within Ethena Labs.

USDe Open Market Arbitrage Vehicle

Since the solvency of USDe is both transparent and provable during all periods of time, if the open market price of USDe divergences sufficiently from the provable asset value backing USDe then the reserve fund may act as a bidder of USDe in the open market.

Capitalization of Reserve Fund

For the duration of the shard campaign the reserve fund will be funded by a portion of the yield generated by the Protocol asset backing which relates to the proportion of USDe that is not staked.

The reserve fund will also be capitalized with funds raised from investors, and longer-term a take-rate will be applied to the yield generated, which will be redirected to the reserve fund to grow alongside the outstanding balance of USDe. This will be decided via governance.


Ethena Labs has conducted detailed modelling on the proposed sizing of the reserve fund under various stressed scenarios to inform the ongoing capitalization of the reserve

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