British multinational bank Standard Chartered expects Ethena’s USDe stablecoin supply to grow eightfold to $40 billion by the end of 2028 as the protocol expands its sources of yield beyond crypto markets.

In a Wednesday research report shared with Cointelegraph, the bank initiated coverage of Ethena’s ENA token with a year-end 2028 price target of $2, roughly seven times the $0.28 price cited in the report. Standard Chartered also expects USDe to slightly outpace overall stablecoin market growth over the period.

Its forecasts imply ENA would also outperform Bitcoin (BTC) and Ether (ETH) through 2028. Standard Chartered sees BTC reaching $300,000 and ETH $18,000 by the end of the period.

Standard Chartered’s year-end digital asset price forecasts through 2028. Source: Standard Chartered Research

Standard Chartered said declining returns from USDe’s traditional crypto basis trade, which involves holding spot crypto while shorting perpetual futures, have pushed Ethena to expand into DeFi and institutional lending, real-world assets and basis trades tied to equities and commodities. Those sources currently generate a blended yield of 5.2%, giving USDe more room to scale.

The bank forecasts the broader market for tokenized assets will grow from about $350 billion today to $4 trillion by the end of 2028, expanding the pool of assets Ethena could use to generate yield.

Related: Ethena launches USDe payments app, offers 6% rewards

USDe growth could fuel ENA buybacks

The link between USDe growth and ENA buybacks is central to Standard Chartered’s valuation case for the token. A fee switch approved by Ethena governance in early September directs 95% of net revenue from its business lines toward ENA buybacks once USDe reaches specified supply milestones.

At $25 billion in USDe supply, Ethena estimates the mechanism could generate $375 million in annual ENA buybacks, assuming a 6% gross protocol yield and a 25% net revenue take rate.

ENA buyback volumes at different USDe supply levels. Source: Ethena

Standard Chartered estimates that if USDe reaches its $40 billion forecast and ENA’s price remains unchanged, annual buybacks could amount to roughly 23% of ENA’s circulating market capitalization. The bank said such a rate would likely be unsustainable, so it expects ENA’s price to rise until buybacks settle at a lower percentage of its market value.

The bank used Uniswap as a comparison, noting that UNI’s annualized buyback rate has stabilized at around 3% to 4% as its token price increased.

ENA was trading at about $0.27 on Wednesday, up roughly 28% over the past week and 77% over the past month, according to CoinGecko data. The token has a market capitalization of about $2.65 billion.

Magazine: Could THORChain face prosecution over stolen Bitget funds?