Layer One: Inside Ethena's new neobank built exclusively on AVAX

Layer One•September 7, 2026, 2:55AM EDT

Welcome to Layer One: the newsletter and podcast on the intersection of crypto and the real world. Hosted by The Block's Kelvin Sparks, Layer One brings you inside the institutional conversations driving blockchain forward.

In our latest episode, we were joined by Guy Young, founder of Ethena Labs, and John Nahas, CBO at Ava Labs, to discuss the launch of Ethena Pay, the evolution of DeFi, and the growing convergence between stablecoins and traditional finance.

In this week’s newsletter, we’re taking a closer look at the trends that made the Ethena Pay rollout possible, and what its launch means for the future of USDe.

Ethena Pay launches on Avalanche, bringing USDe into everyday consumer payments

This Tuesday marked the beta release of Ethena Pay, the new global, self-custodial neobank app from the issuer of the USDe stablecoin. Deployed exclusively on Avalanche, the app allows everyday users to hold, spend, and save in stablecoins without any DeFi knowledge, with up to 6% APY on their holdings and up to 10% cashback.

According to Ethena Labs, the company behind both products, the payments app is the first neobank platform vertically integrated with its own “synthetic dollar” rather than rival stablecoins USDT or USDC.

As part of a wide-ranging discussion over the future of DeFi and crypto, Ethena founder Guy Young explained the app’s mission to “provide a basic dollar with yield for anyone on earth,” meaning better opportunities to save, send, and spend for users around the globe. So far, the app is available on iOS and Android across 48 territories, covering major markets in Africa, Asia, South America, and Australia.

If you're spending five out of seven days in your life working and saving money, being able to do that properly is one of the most impactful things that finance can do for normal people.
— Guy Young

The launch signals the next major growth phase for one of DeFi’s headline success stories of recent years. Launched on Ethereum in early 2024, Ethena’s USDe is a synthetic dollar backed by a delta-neutral portfolio of digital assets and derivatives positions designed to keep its value pegged to $1 (in contrast to the direct 1:1 dollar reserve model used by its largest competitors). Holders can also stake USDe for sUSDe, earning yield generated by the protocol.

Ethena has paid out almost $700 million in cumulative yield since inception, while USDe has become “the most widely integrated dollar asset since Tether and Circle,” according to Young, with partnerships spanning major crypto platforms and TradFi firms.

Yet the next stage of Ethena’s growth means looking beyond crypto-native distribution. Young characterizes Ethena Pay as a necessary evolution to reach a wider audience and “control the destiny of our own distribution in a more meaningful way.”

That means vertically integrating more of the financial stack. Rather than simply providing a stablecoin for somebody else’s app or card, Ethena can combine its own yield-generating infrastructure, stablecoin, and consumer app while plugging into existing payment networks.

“If you're putting a card on someone else's stablecoin and you don't own the full stack, you're basically giving 50% of the business's potential revenue to Circle and Tether on the other side,” Young told Layer One.

Ethena's push into consumer finance comes as DeFi faces a broader distribution problem; the space’s total TVL remains down almost 50% since the 10/10 unwind last year, with many protocols struggling to retain users. Young argues that DeFi platforms have historically churned through “the same users, recycled over and over again through whatever the narrative of the quarter was.”

Reaching a more stable, sustainable audience means both plugging into existing financial systems and abstracting away the complexities of DeFi so non-technical users can participate.

He specifically cites stablecoin card infrastructure firm Rain as a trailblazer in this regard. Last month, Rain CEO Farooq Malik said that an estimated 100,000 merchants were already plugged into its stablecoin payments network without realizing it. This could be what the future looks like for billions of everyday consumers, whose payments will run on back-end blockchain rails, without them ever having to manage a wallet or connect to a dApp.

Meanwhile, the world’s largest payments network has been closing the gap from the other direction: Visa — which handles the traditional side of transactions for both Ethena Pay and Rain — launched an in-house stablecoin platform in July, most recently partnering with South Korea’s Shinhan Financial Group. The company also works with major payments firms including Bridge and Worldpay across its broader stablecoin infrastructure.

Mastercard has followed a similar path, completing its acquisition of stablecoin infrastructure firm BVNK last month.

Crypto-native companies are therefore moving outward toward conventional consumers, while at the same time the existing financial system connects with blockchain rails. It’s this convergence that Young says made Ethena Pay possible: “bringing together many multiple businesses and products to produce a polished and consumer application at the end."

Podcast Recap: Inside Ethena's new neobank built exclusively on AVAX

This week on the podcast, we were joined by Guy Young, founder of Ethena Labs, and John Nahas, CBO at Ava Labs, to discuss the DeFi revival, the launch of Ethena Pay, and how blockchain protocols are restructuring their revenue systems to capture more value in their native tokens.

Subscribe to Layer One on YouTube, Apple, Spotify, or wherever you get your podcasts.

In the Headlines: The stories driving the conversation this week

Robinhood Wallet users were reportedly able to process memecoin purchases by credit card without separate KYC checks. These purchases — facilitated by crypto infrastructure firm Crossmint on the Robinhood Wallet and social trading app Fomo — were allegedly being processed with incorrect transaction codes that categorized them as “digital goods media,” a classification that allowed them to earn ordinary credit card rewards. Card issuer Chase has lodged a complaint with Visa as a result.
European tokenization platform Cashlink is bringing its institutional securities infrastructure to the Avalanche blockchain. The German firm says it has facilitated more than €1 billion in transaction volume across over 300 live issuances, with clients including many major German financial institutions. The Avalanche network’s total RWA volume rose by over 20% in the last three months, spearheaded by a surge in BlackRock’s BUIDL fund growth.
Finance leaders of G20 nations affirmed their commitment to creating ‘clear pathways’ for digital asset innovation this week. Following a two-day meeting in North Carolina, officials committed to advancing regulatory and supervisory frameworks that preserve financial stability while supporting digital asset development. The improvement of cross-border payment systems — one of the headline use cases touted for Ethena Pay — was one major topic highlighted by officials.

Top of the Charts: Ethena’s TVL dropped from $15 billion to $4 billion during DeFi’s wider decline

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