Ethena's USDe stablecoin has entered its fifth market expansion phase

Ethena's USDe stablecoin has entered its fifth market expansion phase, registering a net creation of $547 million in May 2025.

Ethena’s USDe stablecoin has entered its fifth market expansion phase, registering a net creation of $547 million in May 2025. The new cycle, known as Phase 5, follows a series of growth and contraction periods observed over the past year, according to data from Entropy Advisors.

The current total supply of USDe stands at $4.6 billion. If the pattern of past expansions continues, particularly the third growth cycle, the stablecoin’s supply could reach $11.6 billion in the coming months and possibly climb to a $14 billion market capitalization by August 2025.

Phase 5 Growth for USDe @ethena_labs has started with $547M in net creation in May.If Phase 5 mirrors the previous growth cycle, USDe's supply could rise by 8.8B from now until August 2025, reaching a $14B market cap.Note: Past performance does not guarantee future results. pic.twitter.com/Pp0j1br172

Entropy Advisors’ data shows a year-long sequence of alternating creation and redemption activity. The first phase of growth occurred in May 2024, when USDe issuance rose to $3.6 billion over seven months. This was followed by a correction during Phase 2, where redemptions outpaced new issuance, bringing the market cap down to $2.4 billion as staking yields (sUSDe APY) dropped below 5%.

In November 2024, Phase 3 began with USDe issuance exceeding $1 billion in a single month, marking the largest supply surge on record. By January 2025, the market cap had doubled from its prior low, reaching a peak of $6.1 billion. However, this rally was again followed by a decline in supply during Phase 4, falling to $4.6 billion by early May 2025.

Yield Volatility Affects Stablecoin Supply

Another chart by Entropy Advisors compares the average annual percentage yield (APY) of USDe staking products with the token’s market cap over time. The analysis shows a strong correlation between changes in APY and supply behavior.

Between August and October 2024, the APY rose to 45%, leading to a major contraction in USDe supply, from $3.5 billion to $2.4 billion. As funding conditions normalized and APY fell to 20%, investor activity returned, fueling renewed growth.

During these two months (March and early May 2025), the APY bridge token rose to above 45%, but the public did not participate on a significant scale. As a result, the amount of USDe in existence dropped by 25%, indicating that rising yields did not maintain speedy inflation.

The charts show all USDe minting and burning taking place only on Ethereum from May 2024 to May 2025. The blue bars indicate where new money is added, and the red bars signify where money is taken out. Each period of growth, starting in May 2024, November 2024, and May 2025, is then followed by corrections in the market.