Terminal Finance: A Specialized DEX for Yield-Bearing Assets
Terminal Finance is emerging as a decentralized exchange specifically designed for Ethena’s yield-bearing stablecoins. It uses a concentrated liquidity model similar to Uniswap v3, but with important modifications for assets like sUSDe. The platform addresses the impermanent loss problem that typically occurs when yield-bearing tokens appreciate in value within liquidity pools.
What makes Terminal different is its redeemable token framework. When users deposit sUSDe, the protocol converts it to rUSDe – a token that maintains a fixed $1 value while periodically minting additional units to represent earned yield. This approach separates price from yield, ensuring liquidity providers don’t suffer impermanent loss from yield increases while still receiving their earnings through dividend-like payments.
Aave Integrates sUSDe as Collateral
Aave, the established money market protocol, has integrated staked USDe as a collateral asset. This means users can deposit sUSDe and borrow other assets against it while continuing to earn yield in the background. The integration has proven significant – by 2025, over half of all USDe-related assets were deposited into Aave’s markets.
The protocol’s risk management features, particularly the High Efficiency “E-Mode” for stablecoins, have enhanced this relationship. This allows for higher borrowing power for correlated assets, making USDe and other stablecoins more capital-efficient for users.
Pendle Enables Yield Trading and Management
In an ecosystem where yields range from 9-19% APY on sUSDe, Pendle provides tools to trade and manage these income streams effectively. The protocol splits assets like sUSDe into two components: principal tokens representing the fixed claim to the original asset, and yield tokens representing rights to future yield.
This mechanism allows users to either lock in fixed yields by selling yield tokens, or speculate on variable interest rates by purchasing yield tokens. The approach gives users flexibility in how they manage their yield exposure without the liquidation risks associated with traditional leverage. By mid-September, the Terminal tUSDe pool on Pendle had attracted over $230 million in deposits, becoming the highest-yielding USDe market on the platform.
Term Finance Offers Fixed-Rate Lending
Term Finance addresses the need for fixed-rate lending in DeFi, integrating USDe to bring fixed-income products to crypto users. The protocol uses an auction model where lenders and borrowers submit bids in periodic auctions, with the system matching them at a single clearing interest rate for all participants.
This approach eliminates the need for individual negotiations or order books, providing transparency and capital efficiency. USDe holders can lend their stablecoins at fixed rates for specific terms, while borrowers know exactly what interest they’ll pay throughout the loan period. The auction mechanism ensures there’s no slippage or rate spread between lenders and borrowers.
These four projects represent different approaches to building on Ethena’s growing ecosystem, each addressing specific needs in the DeFi space while leveraging the unique characteristics of yield-bearing stablecoins like USDe.
