Can a DEX Built Around Stablecoins That Generate Returns Change How Crypto Markets Work?
Terminal Finance filled three pre-deposit vaults to capacity before opening for business. The Seoul-based decentralized exchange, incubated by Ethena Labs, collected 225 million USDe, 10,000 WETH, and 100 WBTC from participants who wanted early access to what the team calls the "de facto DEX of the Ethena ecosystem." The total value locked surpassed $280 million, according to DeFiLlama data tracking the vault activity.
The numbers represent more than speculative positioning. Over 10,000 individual wallets deposited funds during the pre-launch period, with participants receiving airdrop rewards as part of a token generation event planned to coincide with the platform's launch at year end. The deposits signal that traders see value in a platform purpose-built for assets that generate returns while maintaining a peg to traditional currencies.
What makes Terminal Finance different from the hundreds of other decentralized exchanges operating across blockchains? The platform was designed from the start to handle a specific type of asset that has grown from $1.5 billion to over $11 billion in market value during 2024 and 2025, yield-bearing stablecoins that pay holders a return while maintaining stability.
Understanding Yield-Bearing Stablecoins: The Assets Driving Terminal's Design
Traditional stablecoins like USDT and USDC maintain a $1 peg but generate no returns for holders. The issuers earn billions in annual revenue from Treasury yields and other investments backing the coins, but users receive nothing. Estimates suggest holders of non-yielding stablecoins missed out on approximately $9 billion in potential yearly returns when Treasury rates hovered near 4 to 5 percent.
Yield-bearing stablecoins changed this dynamic. These assets maintain their peg while distributing returns to holders through various mechanisms. Some, like USDY from Ondo Finance, back the stablecoin with U.S. Treasury bills and pass interest directly to token holders. Others, like Ethena's sUSDe, use delta-neutral trading strategies in derivatives markets to generate returns. The sUSDe token, which serves as Terminal Finance's core trading asset, has delivered yields ranging from 10 to 29 percent at various points in 2024 and 2025.
The concept involves two mechanisms for distributing yield. Rebasing tokens increase the number of tokens in a holder's wallet daily while maintaining a $1 price per token. Price-appreciating tokens keep the balance fixed but increase the value of each token above $1 over time. Ethena's sUSDe uses the price appreciation model, where each token becomes worth more than its underlying USDe as yields accumulate. Users can stake 1,000 USDe to receive sUSDe, and after one year at 20 percent APY, those sUSDe tokens could be redeemed for 1,200 USDe.
How Terminal Finance Solves Problems in Yield-Bearing Stablecoin Markets
Existing decentralized exchanges were not built to handle yield-bearing assets efficiently. When users provide liquidity to automated market maker pools with tokens that generate returns, the mismatch in yield between paired assets creates impermanent loss that erodes profits. Traders face slippage when swapping between yield-bearing stablecoins and other assets because liquidity is fragmented across multiple platforms.
Terminal Finance addresses these issues through what the team calls Yield Skimming. The mechanism captures yield generated by assets like sUSDe in liquidity pools and reinjects those returns into the DEX economy. Instead of yield disappearing into impermanent loss, the platform redirects it to benefit liquidity providers, traders, and token holders. "By designing the DEX around a yield-bearing dollar, Terminal benefits from improved economics by default. This makes liquidity bootstrapping significantly more efficient for token issuers and sets a new standard for capital productivity in DeFi," said Co-Founder and CEO Sam Benyakoub in the announcement.
The platform combines an order book model with automated market maker functionality to provide deeper liquidity. At launch, Terminal will feature USDe, sUSDe, and USDtb as core pairing assets. The USDtb stablecoin is backed by BlackRock's BUIDL fund, a tokenized Treasury product that holds over $1.8 billion in value. These pairings allow traders to exchange yield-bearing stablecoins against major assets including ETH and BTC without losing the yield component.
Ethena's Growing Dominance and Terminal's Strategic Position
Ethena has become one of the largest protocols in decentralized finance. The platform's USDe stablecoin reached a market capitalization between $5.46 billion and $12.6 billion depending on the measurement date, making it the third-largest stablecoin globally behind USDT and USDC. The protocol's total value locked exceeded $11.89 billion in August 2025, ranking it as the sixth-largest DeFi protocol and the second-largest non-staking project after Aave.
Ethena generates returns through two streams. The protocol stakes Ethereum collateral to earn consensus and execution layer rewards from network validation. Simultaneously, Ethena takes delta-neutral positions in perpetual futures markets, capturing funding rates that traders pay to maintain leveraged positions. These combined revenue streams produced over $1.2 billion in annual protocol revenue in December 2024, according to company disclosures.
Terminal Finance serves as a liquidity hub for this expanding ecosystem. "Ethena assets have become an engine for DeFi rewards, powering most major Ethereum-based applications today at a billion-dollar scale. The Terminal team has taken this concept, building their spot DEX using sUSDe at its core, to drive additional value to users. We're proud that the Terminal team is a core part of the Ethena ecosystem," said Head of Strategy at Ethena, Nick Chong, in the announcement. The platform operates independently but benefits from Ethena's incubation, integrations with protocols like Pendle, EtherFi, and Morpho, and access to the growing base of users who hold over 757,000 USDe accounts across 24 blockchain networks.
Token Distribution and Early Participant Incentives
Terminal Finance will distribute governance tokens as part of the launch. Public information on Ethena's website indicates that up to 10 percent of Terminal's token supply may be allocated to sENA holders based on the Terminal Points system. The points tracking began on June 28, 2025, and participants who deposited assets during the pre-launch phase accumulated points that determine airdrop eligibility and allocation amounts.
The distribution mechanism follows a pattern established across decentralized finance where early users receive token allocations as compensation for providing initial liquidity and taking on platform risk before features are fully tested. The model incentivizes users to lock capital for extended periods and participate in governance once tokens become tradable. Final eligibility criteria, specific allocation amounts, and timing details will be confirmed closer to the token generation event.
Early participants locked significant capital for months without access to the full trading platform. The three vaults reached their maximum capacity limits, forcing the team to close deposits before the planned launch date. This dynamic suggests demand for exposure to Terminal's governance token and confidence in the platform's potential to capture market share in yield-bearing stablecoin trading.
Cross-Chain Expansion Plans and Competition
Terminal Finance announced plans to expand across multiple blockchains as Ethena extends USDe availability beyond Ethereum. Ethena deployed USDe to over 30 chains including BNB Chain, Solana, and TON using LayerZero's omnichain fungible token standard. Cross-chain volume for USDe exceeded $743 million weekly by September 2025, demonstrating demand for the stablecoin across different ecosystems.
Terminal will need to establish liquidity on each chain where it operates. The platform faces competition from established decentralized exchanges with existing user bases and liquidity depth. Uniswap processed over $123 billion in monthly volume across multiple chains as of 2025. Curve Finance specializes in stablecoin trading with over $4 billion in total value locked. Newer platforms like Aerodrome on Base have captured significant market share through token incentives and low fees.
The competitive advantage Terminal claims centers on specialization. General-purpose DEXs treat yield-bearing stablecoins the same as any other asset, leading to capital inefficiency and poor user experience. A platform designed specifically for these assets could capture traders and liquidity providers frustrated with existing solutions. The success of specialized exchanges in traditional finance, where platforms focusing on specific asset classes often outperform generalists, suggests this strategy has precedent.
Market Size and Growth Trajectory for Yield-Bearing Stablecoins
The yield-bearing stablecoin sector expanded from $1.5 billion in early 2024 to over $11 billion by May 2025, representing growth of more than 500 percent. This expansion occurred despite broader market volatility and regulatory uncertainty in major jurisdictions. The segment includes Treasury-backed products like USDY, USDM from Mountain Protocol, and derivatives-based products like Ethena's sUSDe.
Traditional stablecoins processed $27.6 trillion in transaction volume during 2024, exceeding the combined annual throughput of Visa and Mastercard according to industry data. If even a small percentage of stablecoin users migrate to yield-bearing alternatives, the addressable market could reach several trillion dollars. Some analysts project the total addressable market for yield-bearing stablecoins could reach $3.5 to $10 trillion by 2030.
Regulatory developments could accelerate or constrain this growth. The STABLE Act and GENIUS Act introduced in the United States provide clearer frameworks for stablecoin issuers. Ethena partnered with Anchorage Digital, a federally chartered crypto bank, to issue USDtb in compliance with U.S. regulations. Terminal Finance's positioning as the primary liquidity venue for both offshore USDe and compliant USDtb could allow the platform to capture flows from both retail DeFi users and regulated institutions.
Technical Architecture and Launch Timeline
Terminal Finance operates on Converge, Ethena's Layer 2 solution built for the ecosystem. The platform combines a central limit order book with automated market maker pools to provide liquidity depth across different trading strategies. Professional market makers can place limit orders at specific prices, while retail users can swap tokens instantly through AMM pools without waiting for counterparty orders.
The order book model provides price discovery and allows traders to see available liquidity at each price level. The AMM component ensures immediate execution for users who prioritize speed over price optimization. This hybrid approach has gained adoption on platforms like dYdX for derivatives trading, where different user types require different execution methods.
The platform launch is scheduled for the end of 2025, with the token generation event expected to align closely with that timeline. The team has not specified an exact date, likely due to the complexity of coordinating technical deployment, security audits, token distribution, and regulatory compliance across multiple jurisdictions. The pre-deposit vaults will convert to active trading pools at launch, providing initial liquidity for the platform.
Risks and Challenges Facing Terminal Finance
Several factors could impact Terminal Finance's ability to capture market share. The platform depends entirely on Ethena's continued growth and the stability of yield-bearing stablecoins. If funding rates in perpetual futures markets turn negative for extended periods, sUSDe yields could decline or disappear, reducing demand for trading these assets. The Terra LUNA collapse in 2022 damaged confidence in algorithmic stablecoins, and any failure in Ethena's delta-hedging mechanism could trigger similar panic.
Regulatory scrutiny of synthetic stablecoins continues to intensify in the United States and Europe. Regulators have questioned whether yield-bearing stablecoins constitute securities that require registration and compliance with investor protection rules. Terminal Finance may face restrictions on U.S. user access or requirements to implement know-your-customer procedures that conflict with the platform's positioning as a permissionless decentralized exchange.
Technical risks include smart contract vulnerabilities, oracle manipulation, and cross-chain bridge exploits. The platform's Yield Skimming mechanism introduces complexity in the token contracts that increases attack surface for potential exploits. The integration with multiple protocols, chains, and external price feeds creates dependencies where failure in any component could impact the entire system. The team has not disclosed security audit results or bug bounty programs that would provide transparency into risk mitigation efforts.
My Analysis and Final Thoughts
Terminal Finance represents a bet on specialization in decentralized finance. The platform targets a specific market segment, yield-bearing stablecoins, rather than attempting to serve all trading needs. This focus could generate network effects if the platform becomes the default venue for these assets, similar to how Curve Finance dominated stablecoin swaps by optimizing specifically for low-slippage trades between similar assets.
The $280 million in pre-deposits demonstrates real demand, not just speculative interest in a token airdrop. Participants locked capital for months in vaults with no trading functionality, suggesting confidence in the long-term value proposition. The involvement of 10,000 separate wallets indicates broad community interest rather than concentration among a few large participants.
However, several questions remain unanswered. The team has not disclosed the token distribution schedule, vesting periods for insiders, or the percentage of supply allocated to early investors versus community participants. Without this information, users cannot assess the risk of significant token dumps after launch. The platform's revenue model and how it sustains operations while competing against established DEXs with venture funding remains unclear.
The Yield Skimming mechanism sounds innovative but requires proof in live markets. If the implementation fails to deliver better returns than simply holding sUSDe, liquidity providers will move to platforms with simpler, proven models. The success of Terminal Finance depends on execution quality, not just the theoretical advantages of specialization.
The platform launches into a competitive environment where users have multiple alternatives. Whether Terminal Finance captures meaningful market share will depend on delivering superior user experience, maintaining security, and building liquidity depth across the assets it supports. The pre-launch metrics suggest the platform starts with advantages, but the decentralized exchange landscape has seen many projects with strong launches fail to maintain momentum once the initial excitement fades.
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