Ethena adds AAA CLO exposure to stabilize USDe yields

Ethena adds AAA CLO exposure to stabilize USDe yields

Ethena protocol has started expanding into real-world asset (RWA) tokenization. The move aims to boost yields and reduce dependence on crypto market swings. On Friday, the team behind the yield-paying stablecoin $USDe shared their plans.

Why AAA-rated CLOs are the focus

The first asset category under review is AAA-rated Collateralized Loan Obligations (CLOs). These sit at the top of the capital stack. According to the team, there has been a zero default rate at the AAA level across the entire history of the asset class. CLOs are pools of loans from individual companies, managed by asset managers. Think of them like an ETF that tracks different stocks, but instead of stocks, they track pooled corporate loans. The AAA rating is the highest evaluation score from firms like Moody’s. It signals the lowest default risk or high credit quality.

Why Ethena is betting on CLOs

Beyond credit quality, Ethena wants an RWA asset with high liquidity and low downside. The team believes CLOs, especially the Janus Henderson Anemoy AAA CLO Fund, fit this need. During past crises like COVID-19 and the high Fed interest rate period, the broader CLO sector fell only 8% and 2%, respectively. In comparison, the S&P 500 Index dropped 33% and 22% during those same events. For a 5% drawdown, CLOs took just 5 to 8 days to recover. In crypto, it has been about eight months since Bitcoin began its contraction, and it is now down more than 50% from its $126,000 peak.

For those unfamiliar, Ethena’s $USDe currently uses crypto funding rates to generate yield. During bull markets, higher funding rates lead to higher yields. But bear markets compress funding rates and lower yields. This gets worse when recovery takes longer. That is why the protocol already diversified into RWA, starting with BlackRock’s BUIDL fund, which relies on U.S. Treasury bonds.

New allocation and potential impact

Now, Ethena plans to expand this RVA exposure further. It will allocate $310 million to the Janus Henderson Anemoy AAA CLO Fund. The team believes this will break the link between yield returns and crypto market volatility, offering what they call “more stable returns.” The logic is that AAA CLO yields depend on short-rate policy, credit-spread dynamics, and loan market structure. None of those factors are tied to crypto sentiment or positioning.

The announcement comes after recent partnerships with Coinbase and Brazil’s largest exchange, Mercado Bitcoin. It remains unclear whether these efforts will boost demand for $USDe, which has dropped sharply since last October.

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