The USDE mNAV Trade

Anyone who's been in crypto a few years remembers GBTC. For most of 2022 you could buy Bitcoin through Grayscale at a big discount, at times more than 40%, and the people who bought that discount and waited for the ETF got paid.

There's a smaller (less liquid) but even more lucrative version of that setup taking place right now.

StablecoinX (USDE), a crypto DAT, owns about 20% of all the ENA outstanding. At Friday's close the stock was $6.43, and every share has 125.48 ENA behind it, worth $20.10. You're paying 32 cents for every dollar of ENA, $155 million for a $485 million bag of tokens.

Six weeks ago Ethena gave the DAT a waiver, unlocking every one of those tokens. The lock-ups were the main reason the stock traded at a discount in the first place. Into the waiver being granted, which was widely known to be on the table, the USDE mNAV went from .15 to .61, but has since crashed back down to .32.

Starkiller has been in this trade since August at an mNAV of .18, and took profit on the accumulated USDE at .60 when we rebalanced the trade. We’ve since taken back a larger position as that mNAV has melted with the rest of the crypto market the past 6 weeks. While we’re obviously not publishing this research solely out of the goodness of our hearts, we believe enough (a lot) in how irrational the market is behaving to be loud about this publicly in hopes our like minded peers will benefit.

Below is the case for the trade, and the risks, as plainly as we can lay them out.

Some background

StablecoinX came public in June through a SPAC merger with TLGY. Ethena built it as the public market vehicle for ENA, the same playbook as the BTC and ETH treasury companies, with a small infrastructure business attached that doesn't matter for valuation yet ($62k of revenue in the last two weeks of June). At the end of Q2 it had about $19 million of cash and about $18 million of liabilities, so for practical purposes the company is a pile of ENA and you can value it that way. And before we go any further, let us just say that we generally think crypto DATs are garbage, there’s basically no reason they need to exist at this point. In fact, there’s really no reason USDE needs to exist. It adds no actual value to the ecosystem and as you can see from the discount to NAV it’s generally a bad vehicle for holding beta exposure.

But we look at it dispassionately through mNAV, market cap divided by the market value of the ENA. The share price is just ENA price times ENA per share times mNAV. Hedge out the ENA and the only thing left is the multiple, and the multiple is what we're trading.

Why the discount made sense until it didn't

For most of the time it's been public there was a good reason for the stock to trade at a big discount. About half the ENA was locked under the token purchase agreements on a 48 month schedule that ran out to 2029, and every sale needed Ethena Foundation consent on top of that. As of October 4th, 1.56 billion ENA were still locked.

The market priced that pretty rationally. Measure the stock against only the unlocked ENA and it traded right around 1x from late August through early October. Investors were paying full value for the tokens the company could actually get at and nothing for the rest.

Then on September 14th Ethena and the Foundation signed a letter waiving every lock-up, effective October 5th. Overnight, the unlocked ENA per share went from $14.82 of value to $30.28. The stock went from $14.15 to $14.96.

If the market had kept pricing USDE the way it had been, against the unlocked ENA, the stock should have roughly doubled. Instead the grey line became the blue line and the multiple drifted from 0.49x to 0.32x.

So why did it get wider?

Because October happened. Bitcoin fell 7% and ENA fell 29%, and when the whole market is melting nobody is sitting around recalculating the NAV of a small cap treasury company. They're cutting crypto exposure, and USDE is crypto exposure.

The stock gets hit harder than the token for a few reasons. A lot of the holder base owns USDE as a way to be long ENA in a brokerage account, so when they want out of ENA, they sell USDE. It's also one of the least liquid things those holders own, a $155 million company doing about a million shares a day, so when people de-gross it's the position that gaps.

Shorts piled on top of that. Short interest jumped 78% to about 2.8 million shares, roughly 15% of the float.

None of that touches the ENA. The company has the same 3.029 billion tokens it had in September, and now every one of them can be used to buy back stock. The price fell for reasons that have nothing to do with what the stock is backed by, and that's the kind of discount we want to own.

The flip side of the multiple trading with crypto beta is that it tends to come back when the market does. In August and September the multiple went from 0.15x to 0.61x as ENA rallied, because the same people who use USDE as an ENA proxy came back in. October was that dynamic running in reverse. When the tape turns, the people who dumped the stock to cut beta are the ones who come back and buy it.

Unlocked doesn't mean the company can just dump tokens, the Foundation still has to sign off on sales. What matters is that the waiver letter pre-consents to what it calls funding sales, and one of the uses it specifically lists is buying back stock under a Foundation approved 10b5-1 plan.

How this closes

Buying back stock below NAV is the most accretive thing a vehicle like this can do, and at 0.32x it's really accretive. Every dollar of ENA sold to buy back stock retires shares backed by $3.13 of ENA, which leaves $2.13 of extra NAV for the holders who stay. At Friday's prices a third of the treasury would buy back every Class A share outstanding.

It doesn't even require selling ENA into the market. The letter gives the Foundation the right to buy any ENA the company wants to sell, so the Foundation can take the tokens off market, the company uses the cash to retire stock, and ENA holders never have to absorb the supply.

Will they do it? We think the incentives point that way. The CFO said in the Q2 release that narrowing the gap between market cap and the value of the holdings is a focus, and there's been a new CEO since September. Ethena is out pitching USDe to BlackRock's Aladdin users, Janus Henderson and Coinbase, and having the listed proxy for your token trade at a third of its value doesn't help that conversation. The Foundation also didn't have to sign a waiver that calls out buybacks by name. They did.

The next datapoint is the Q3 10-Q, due by November 16th, the first quarterly filing since the waiver was signed.

Putting it on

Long USDE, short ENA, equal dollars on both sides. A lot of people get this part wrong. You don't short 125 ENA for every share you buy. At a given multiple the stock moves 1:1 with ENA in percentage terms, so equal dollar notional is the hedge.

We short the ENA through perps, so funding is a cost to budget for, though the funding rate for the ENA perp on Hyperliquid has been positive the whole way through our trade, even in the last 6 weeks. USDE trades about a million shares a day on Nasdaq. If the trade works the long grows faster than the short, so you have to rebalance or you end up net long ENA. Now, in a positively trending market this plays to your advantage if you want to take a little bit of beta risk with your accumulated gains from the revaluation of the mNAV. We did this between August and October and it paid off, but it’s something you need to time.

This is roughly what it pays on the long notional if ENA doesn't move, before funding and costs. Gross exposure is twice the long.

Exit mNAV	When it last traded there	Return on long notional
0.25x	Below anything since August	-22%
0.40x	Late October	+25%
0.50x	October 5th, the day the lock-ups came off	+56%
0.61x	September 25th high	+91%
1.00x	Never	+213%

You don't need parity for this to be a great trade. Getting back to where it was the day the lock-ups came off is worth 56% on the long. We believe that this should eventually trade at an mNAV of .7, which is where a bunch of other DATs that even have a lot of locked tokens trade.

There are multiple short term catalysts we've laid out above, but the reality is this is an arb that may be difficult to time. That said, given the comps and the fact that you're effectively getting paid around a 5% yield (half the positive funding rate of the ENA short) to hold the trade, it simply makes sense not to try and time the catalyst but hold it structurally.

What can go wrong

Nothing forces this discount to close. There's no redemption mechanism, and GBTC is the reminder here too: that discount sat wide for two years and it took an ETF conversion to close it.

The Foundation controls the exit. It has to consent to sales, it names one of the three seats on the investment committee, and it controls the Class B vote. If it never approves a buyback, the discount can sit here.

There's supply. An S-1 registered about 12.7 million shares for resale by existing holders, more than half the Class A count, and those holders can sell into any rally.

The discount can get wider. The stock listed at 0.36x and got as low as 0.13x in July. October took it from 0.49x to 0.32x with nothing wrong at the company.

The warrants dilute a recovery. There are 11.5 million listed warrants at $11.50 and about 7.6 million sponsor warrants at $11.50 and $15. They're out of the money today, but they cap things on the way back up.

And the crypto market could simply nuke hard, in which case investors could assume the ENA held by USDE is worthless anyway sending the mNAV back to the floor under the assumption the value will never be unlocked.

Bottom line

For three months the market priced this stock against the ENA the company could actually sell. Then all of it became sellable, the company got a pre-approved path to buy back its own stock at 32 cents on the dollar, and the market priced it lower. We've held this since August, and we like it more at 0.32x than we did when we got in.

Disclosure: Starkiller Capital and its affiliates hold a long USDE / short ENA position and may add to, reduce or exit it at any time, including after this post is published, without notice. This post is market commentary for informational purposes only. It is not investment advice or an offer to buy or sell any security or any interest in any fund. Figures are as of the November 6, 2026 close unless noted.