If you invest in Ethena.

If you invest in Ethena.

How much of Ethena’s RWA investments are allocated to government bonds or financial institutions, what percentage they represent, and how much is invested specifically in U.S. Treasury bonds.

Let’s look at the portfolio composition of Ethena’s investments in RWA (Real World Assets).

According to recent updates, RWA accounts for about 11.2% of their collateral composition.

Additionally, liquid stablecoins make up about 35%, and DeFi lending accounts for around 46%.

The exact proportion invested in U.S. Treasuries is not specified in public data, but Ethena’s RWA investments extend beyond government bonds to various credit assets, stablecoins, and institutional lending.

Therefore, Ethena’s RWA strategy appears to be evolving into a diversified approach rather than focusing solely on government bonds.

So if Ethena lends using liquid assets, would Ethena’s value also rise sharply when the collateral value increases?

If Ethena lends using liquid assets, its profitability can naturally improve when the value of the collateral increases.

Higher collateral value reduces risk and enables more stable operations, which can positively affect Ethena’s value.

Let me explain the two key mechanisms Ethena uses to protect its assets and maintain system stability.

1. Custody and management of spot assets (OES system)

Ethena uses a unique asset custody method to avoid risks of centralized exchanges (CEX) going bankrupt or being hacked.

Off-Exchange Settlement (OES): Ethena does not deposit spot assets directly into derivative exchanges like Binance or Bybit.

Institutional-grade custody: Instead, assets are stored in secure wallets of professional custodians such as Copper, Ceffu, and Fireblocks.

Risk separation: Ethena links only asset records and trading permissions to exchanges to take short positions.

Thus, even if an exchange collapses, the spot assets remain safely with custodians, greatly reducing counterparty risk.

2. The role of the Reserve Fund

The reserve fund acts as a safeguard and insurance to protect the Ethena ecosystem from external shocks.

Defense against negative funding rates:

Since Ethena holds short positions, it receives funding fees in bull markets but may have to pay them in extreme bear markets.

In such cases, the reserve fund covers these costs.

Protecting the $1 value of USDe.

If paying funding fees reduces the principal of collateral assets, maintaining USDe’s $1 peg becomes difficult.

The reserve fund absorbs these losses to keep USDe at $1.

How the fund is accumulated.

When market conditions are favorable and funding fee revenue is high, Ethena allocates part of its protocol revenue to the reserve fund.

This text is something I wrote to study.

My memory has been declining lately, so I wrote this based on news and facts to review frequently.

Investment is a personal responsibility. Please study well before investing.