Standard Chartered has started coverage of Ethena’s ENA token with a $2 price target, compared with the $0.28 reference price cited in its report. The bank expects Ethena’s USDe supply to expand eightfold to $40 billion by the end of 2028.

That growth projection places Ethena’s buyback strategy at the center of the valuation case. The question is whether the protocol can expand its revenue base and yield-generating activities quickly enough to create the level of token demand implied by the $2 target.

Standard Chartered expects USDe to grow slightly faster than the overall stablecoin market and forecasts ENA to outperform Bitcoin and Ether through 2028. These figures represent the bank’s projections rather than guaranteed returns, and they depend on Ethena continuing to expand revenue and channeling a significant portion of it toward ENA buybacks.

Diversified Yield Becomes Key to the Buyback Thesis

Ethena initially relied on crypto basis trades as its main source of yield. As returns from that strategy have fallen, the protocol has diversified into DeFi, institutional lending and basis trades involving equities and commodities. Standard Chartered estimates that these strategies currently produce a combined yield of 5.2%.

The broader mix of strategies gives Ethena additional avenues for generating income, but it does not remove its exposure to market conditions. Standard Chartered forecasts the tokenized-asset market will grow from $350 billion to $4 trillion by 2028. Ethena would need to capture a meaningful share of that expansion to convert the broader market opportunity into recurring protocol revenue.

Ethena governance has approved a fee switch directing 95% of net revenue from certain business lines toward ENA buybacks once USDe reaches specified supply milestones. Under certain assumptions, Ethena estimates that reaching $25 billion in USDe supply could support roughly $375 million in annual buybacks.

The estimate remains conditional on USDe reaching the required supply level and the associated revenue streams generating the expected income.

At $40 billion of USDe supply, Standard Chartered estimates that buybacks could equal about 23% of ENA’s market capitalization if the token’s price remained unchanged. The bank considers that level unsustainable and expects ENA to appreciate, which would reduce buybacks as a percentage of market capitalization. The report uses Uniswap’s annual buyback rate of roughly 3% to 4% as a reference point.

The flat-price scenario highlights why the $2 target cannot be explained by buybacks alone. If ENA stayed at the same price while USDe expanded significantly, the projected repurchases would become unusually large relative to the token’s circulating market value. Standard Chartered’s model instead assumes that ENA rises alongside protocol growth, causing the buyback-to-market-cap ratio to normalize.

That is an assumption within the valuation model, not evidence that the market will necessarily provide enough demand to absorb the buying or sustain the projected valuation.

The revenue side of the thesis is also exposed to market conditions. Lower basis-trade returns, reduced activity in relevant markets or slower adoption of newer yield strategies could decrease the income available for buybacks. These represent potential risks to the forecast rather than established outcomes.

Regulatory changes could provide another variable for stablecoins and yield-bearing dollar products. Shifts in policy could influence distribution and demand and, in turn, affect Ethena’s economics without directly altering the bank’s stated ENA target.

Standard Chartered’s September 30 market snapshot put ENA at around $0.27, with a market capitalization of approximately $2.65 billion. The token had gained about 28% over the previous week and 77% over the previous month, according to the report. The $0.28 figure is the separate reference price used to compare ENA’s market level with the $2 target.

The current setup combines strong short-term momentum with a longer-term fundamental thesis based on USDe growth, diversified yield and token buybacks. The $2 projection ultimately depends on those components developing together. Slower USDe expansion or weaker revenue generation would reduce the support for the assumptions underlying the forecast.