The crypto stablecoin arena has a new rising star, and its name is Ethena. This is thanks, in large part, to its flagship synthetic dollar, USDe, which has been one of the top-performing assets among the crypto top 100 in recent months.
By August 2025, USDe’s supply had surged to approximately $12 billion, making it the third-largest stablecoin in the market, capturing a ~5% share of the entire sector. Unlike traditional stablecoins (USDC, USDT, etc.), USDe is yield-bearing, offering holders roughly 9–11% APY through a delta-neutral strategy that hedges collateral while earning funding yields.
USDe market cap over the past twelve months (source: CMC)
Such a model has attracted a flood of users, with USDe’s supply nearly tripling from mid-2025 (approaching $15 billion by October), setting the stage for a vibrant ecosystem around Ethena. Listed below are four of the best DeFi projects in this realm, so without any further ado, let’s jump straight into the heart of the matter.
1. Terminal Finance
From the outside looking in, Terminal Finance is shaping up to be Ethena’s most promising decentralized exchange (DEX), purpose-built for trading the ecosystem’s yield-bearing stablecoins (“reward-bearing dollars”) and institutional assets. Much like Uniswap or Curve, Terminal will adopt a concentrated liquidity AMM model, but will be designed specifically to support assets like sUSDe (staked USDe), with deeper yield-aware optimizations built in.
In terms of its operationality, the exchange will use concentrated liquidity pools (an AMM model adapted from Uniswap v3) to enable efficient trading with low slippage. That said, what makes Terminal truly unique is how it handles yield accrual within its liquidity pools.
Normally, providing a yield-bearing asset like sUSDe in a liquidity pool would cause impermanent loss as the token’s price creeps up from earned interest. Terminal solves this via a “redeemable token” framework where, as and when liquidity providers deposit sUSDe, the protocol wraps it into rUSDe, a token that is fixed at a $1 value but periodically mints additional units to represent the yield earned.
In simple terms, rUSDe acts like a stable $1 placeholder for sUSDe in the pool, while the extra value that sUSDe gains from yield is paid out as new rUSDe to the LPs as a dividend, effectively separating price from yield and ensuring that arbitrageurs can’t drain the pool when sUSDe’s price rises (since rUSDe itself never trades above $1) while ensuring that liquidity providers suffer no impermanent loss from the yield increase.
2. Aave
Widely recognized as a trusted money-market DeFi protocol, late last year, Aave onboarded sUSDe (staked USDe) as a collateral asset, meaning that holders of the token could deposit the token and borrow other assets against it, all while continuing to earn a yield in the background.
Furthermore, as of 2025, over half of all USDe-related assets have been deposited into Aave’s markets, showing just how integral the project has been for Ethena’s liquidity.
Not only that, Aave’s risk management features (like High Efficiency “E-Mode” for stablecoins) have further enhanced this synergy, allowing for higher borrowing power for highly correlated assets, making USDe and other stablecoins very capital-efficient.
3. Pendle Finance
In an ecosystem where yields are a central feature (like the 9-19% APY on sUSDe), Pendle provides the tools to trade and manage those income streams effectively, splitting an asset like sUSDe into two parts, i.e. a principal token (PT) that represents the fixed claim to the original asset, and a yield token (YT) that represents the right to the future yield generated.
This mechanism lets users do clever things. For instance, an Ethena user can deposit USDe to get sUSDe, then use Pendle to split it such that they could sell the yield token and effectively lock in a fixed yield upfront (the PT will be redeemable 1:1 for sUSDe later, and it’s bought at a discount which equates to a fixed APY).
Conversely, yield-hungry traders can buy the yield token to leverage the variable interest and get a higher APY (with no liquidation risk, since they’re not borrowing) if they believe the yield will stay high.
In layman’s terms, Pendle enables both fixing the interest rate and speculating on interest rate changes for assets like sUSDe, something that is extremely useful in contexts where yields can fluctuate with funding rates and market conditions.
In fact, it bears mentioning that by mid-September, the Terminal tUSDe pool on Pendle had witnessed over $230 million being deposited and became the highest-yielding USDe market on the platform.
4. Term Finance
Not all lending in DeFi needs to have floating interest rates, and that’s where Term Finance has carved a niche for itself. The protocol offers fixed-rate lending and borrowing for crypto, integrating USDe to bring fixed-income style products to the masses.
To elaborate, Term uses an auction model to set a fixed interest rate for a fixed-duration loan where lenders and borrowers each submit bids/offers in periodic auctions, and the protocol matches them to lock in a single interest rate for all participants of that term, without any individual negotiation or order books.
The result is that USDe holders can lend out their stablecoins at, say, a fixed 5% annual rate for a 3-month term, and borrowers can know exactly what interest they’ll pay for those 3 months. All of this is done with no slippage or “rate spread” between lenders and borrowers, with the auction mechanism finding one clearing rate, making it very capital-efficient and transparent.
