This feels like a situation where your thesis can be correct and still lose money. Project-wide, Ethena has been a money loser to date. Returns, however depend on where in the capital structure you are. ENA is the bottom of the capital structure - you want the Ethena equity, which gets paid. Below that, you’d rather have sUSDe. ENA is the thing that is used to subsidize yield on USDe, which has not yet organically stood on its own two feet. This creates a situation where the project can be cash flow positive but still hemorrhaging money. Kind of like if you paid management (equity) and creditors (USDe) but kept selling ATM stock. Of course, cost basis matters. But this is akin to buying UNI tokens when you should have bought Uniswap equity.

So I think it’s an open question if Ethena’s product even has PMF. It’s been well executed, generally, but still has to use ENA as a way to make the yield attractive on a risk-reward basis. Either the risk premium needs to come down (very plausible) or it needs to squeeze better margins out of operations (seems possible but not really within their control)