Is Ethena Pay Earn+ safe? The risks of looped USDe
Earn+ earns more than the Main balance by borrowing against USDe on Aave, and that borrowing brings risks the Main balance doesn't carry. Each one has a known trigger and a set of limits around it.
Is Ethena Pay Earn+ safe?
Ethena Pay Earn+ targets up to 12% APY, twice the 6% top rate on the Main balance, by running a borrowed USDe position on Aave. That adds four risks: borrow rates can climb above USDe rewards, the position can be liquidated, unwinding can cost a discount, and smart contracts can fail. Ethena Pay's FAQ says a user could lose some or all of the money moved in. Withdrawals stay open at any time.
Earn+ launched on 28 October 2026 for Pro and VIP users. Ethena Pay said on X the same day that it would reach every user in the coming days.
Earn+ risks at a glance
Risk | What triggers it | What limits it |
Borrowing cost | The USDT borrow rate on Aave rises above the USDe reward rate | Steakhouse shrinks the loop when borrowing gets expensive |
Liquidation | The position's health factor falls below 1.0 | Health factor of about 1.88 on 29 October 2026; liquidators repay only enough to restore a target health factor |
USDe price and exit cost | USDe trades below $1 when the loop has to be unwound | Aave prices USDe off a USDT feed; whitelisted users can redeem USDe with Ethena at $1 |
Smart contracts | A bug or exploit in the Upshift vault, Aave v4 or USDe | 11 audits by 6 firms on Upshift's contracts; a multisig holds the vault owner role |
Withdrawal timing | Many users withdraw at once, or the loop has to unwind first | Withdrawals processed within 24 hours in normal conditions |
Size | Too much money in one position on a new market | $4.5M vault-wide cap at launch; $20,000 to $200,000 per user by tier |
Sources: Ethena Pay's Earn+ launch post and FAQ, LlamaRisk's Aave governance review of USDe on Avalanche, and an onchain read of the position at 13:09 UTC on 29 October 2026.
Borrow rates can rise above USDe rewards
Earn+ makes money on the gap between two rates. The strategy supplies USDe as collateral on Aave v4 on Avalanche, borrows USDT, buys more USDe and repeats, and Ethena Pay's launch post says it targets a ratio of about 11x. The whole position earns USDe rewards, while interest is paid only on the borrowed USDT.
When the USDT borrow rate climbs toward the reward rate, that gap closes. If borrowing costs more than USDe earns, each loop loses money instead of adding it. Steakhouse Financial, which runs the strategy, watches both rates and unwinds part of the loop when borrowing gets expensive. Earn+ can still earn less than the Main balance, or lose value, while that happens.
USDe rewards themselves move with the market. Ethena's funding risk page explains that USDe's backing earns from perpetual futures funding, which can turn negative for a time, and that a Reserve Fund steps in when the combined revenue goes negative.
How liquidation works on the Ethena Ecosystem Spoke
A health factor measures how far a borrowing position sits from liquidation. Aave's v4 documentation makes a position eligible for liquidation once its health factor drops below 1.0. A liquidator then repays part of the debt and takes collateral at a bonus, and in v4 that bonus rises the further the health factor has fallen.
The Earn+ position sits on the Ethena Ecosystem Spoke, an Aave v4 market on Avalanche set up for USDe. At 13:09 UTC on 29 October 2026 it held about 6.34M USDe supplied against about 3.14M USDT borrowed, with a health factor of about 1.88. A bigger loop earns more and sits closer to 1.0.
LlamaRisk, an Aave risk service provider, published its recommended setup for this market on 18 September 2026:
- USDe as collateral only, with a 93% collateral factor.
- A maximum liquidation bonus of 2%, with liquidators repaying only enough to bring the position back to a target health factor of 1.0277.
- USDe priced with the capped USDT/USD feed, the same approach Aave uses for USDe on its other markets.
- A cap of 50M USDT that the market can lend out.
Both the USDe collateral and the USDT debt are valued off the same USDT feed, which leaves interest as the main thing that moves the health factor. The USDT debt grows at the borrow rate, and the strategy repays debt or adds collateral to hold the health factor where it wants it.
USDe's price and the cost of unwinding the loop
USDe holds its value through a hedged portfolio. Ethena's docs describe spot crypto and other volatile assets paired with short futures of about the same size, alongside liquid stablecoins and short-dated real-world assets that need no hedge. Whitelisted users can mint and redeem USDe with Ethena directly, which gives traders a way to close a gap when USDe trades away from $1.
To return USDT debt and pay out withdrawals, the strategy sells USDe for USDT, and any discount at that moment comes out of depositors' balances.
Smart contract and operator risk
Earn+ runs on three sets of contracts: the Upshift vault, Aave v4 and USDe itself. A bug or exploit in any of them could reduce or lock up the money in Earn+, and Ethena Pay's FAQ lists technology risk and third-party risk first among its Earn+ disclosures.
Upshift runs the vault. It takes USDe deposits from the app, issues vault shares, values Steakhouse's Aave position to set the share price and processes withdrawals. A multisig holds the vault's owner role, and Upshift's contracts have been through 11 smart contract audits by 6 independent firms. Steakhouse runs the strategy from its own account connected to the vault.
How Earn+ risk compares with the Main balance and sUSDe
Main balance | sUSDe (staked USDe) | Earn+ | |
Headline rate (Oct 2026) | Up to 6% a year | Ethena's variable staking rate | Up to 12% APY |
Borrowed money in the position | None | None | USDT borrowed on Aave v4 |
Can be liquidated | No | No | Yes, below health factor 1.0 |
Fixed or promised rate | No; Ethena Pay's rewards are discretionary | No; Ethena's rewards are discretionary, and Ethena says they're positive or flat | No; the return can fall below zero when borrowing costs more than USDe earns |
Exposure to USDe's price | Yes | Yes | Yes, on a larger position |
Main balance terms are from the Ethena Pay pricing page, and sUSDe terms from Ethena's rewards mechanism page. All three hold USDe, and none is a bank deposit.
Always make sure to do your own research and be aware of the above and any other risks before depositing.
Frequently asked questions
Can you lose money in Ethena Pay Earn+?
Yes. Ethena Pay's FAQ says a user could lose some or all of the money moved into Earn+, and that Ethena Pay doesn't guarantee results, including safety of principal. It adds: "Only move money you are comfortable placing at risk."
Is Earn+ insured?
No. Ethena Pay says money in Earn+ isn't a bank deposit and isn't insured by the FDIC, SIPC or any other deposit insurance or investor protection scheme.
What happens to Earn+ if USDe loses its peg?
Aave values USDe off a USDT price feed, and a USDe price drop on its own doesn't trigger liquidation of the Earn+ position. The loss shows up when USDe is sold to unwind the loop or pay withdrawals, at whatever price USDe trades at then.
How fast can money come out of Earn+?
Ethena Pay processes Earn+ withdrawals within 24 hours into the USD Account, with no fee. Its FAQ warns that withdrawals can take longer than usual, in which case the app marks them as processing.
Who controls the Earn+ vault?
Upshift runs the vault contract, and a multisig holds its owner role. Steakhouse Financial runs the Aave strategy. Ethena Pay provides the app interface and doesn't custody or manage the assets in Earn+.
Is Earn+ the same as looping USDe on Aave yourself?
It's the same kind of position, run for the user. Steakhouse sizes the loop and manages the debt, and Guy Young, Ethena's founder, described Earn+ on X as having "no management of debt positions required at all."
Why is there a cap on Earn+?
Ethena Pay set a $4.5M limit across all users at launch and says it will raise it as caps fill. Per-user limits run from $20,000 for Standard accounts to $200,000 for VIP.
Keep reading
- What is Ethena Pay Earn+ and how does it work?
- Ethena Pay Earn+ case study, with day-one deposit numbers
- Earn+ is live on Ethena Pay, powered by Upshift
- What is Ethena USDe? How the synthetic dollar holds its value
- Where does stablecoin yield come from?
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