425: TLGY SPAC Merger Advances, Ethena Labs Eyes TradFi-DeFi Bridge

TLGY Acquisition Corp. progresses with its business combination, as Ethena Labs' founder discusses a successful $500 million digital asset treasury raise and strategic vision for connecting traditional finance with decentralized finance.

Summary

• TLGY Acquisition Corp. (TLGY), StableCoinX Assets Inc. (SC Assets), and StableCoinX Inc. (Pubco) are proceeding with a business combination agreement signed on July 21, 2025, which will result in TLGY and SC Assets becoming wholly-owned subsidiaries of Pubco, and Pubco becoming a publicly traded company.
• Guy Young, founder of Ethena Labs S.A., discussed the proposed transaction and Ethena's strategy in a September 8, 2025 interview, acknowledging past fundraising mistakes of raising 'too much at too low a price' but emphasizing course correction.
• Ethena Labs recently completed a second Digital Asset Treasury (DAT) raise of $500 million, with a couple hundred million in buybacks, utilizing a unique structure where investors buy locked tokens and proceeds are recycled into spot purchases on the open market.
• Young highlighted the structural challenge of insufficient liquid market capital for crypto tokens and the need to connect crypto to TradFi capital pools, noting TradFi's demand for stablecoin exposure.
• Ethena is positioned as a significant competitor in the stablecoin sector, having crossed $10 billion, and is uniquely responsive to rate cuts, with funding rates on its product tending to increase when real-world rates fall, unlike Circle's business model.
• A key strategic focus is developing compliant pathways for large-scale capital flow from TradFi into DeFi, enabling a 'carry trade' by raising debt financing at 5-6% in TradFi and deploying it into DeFi products like USDe at 10%.

Sentiment

Score: 8

Explanation: The filing conveys a strong positive sentiment, driven by the successful second capital raise, Ethena's rapid growth and unique market positioning, and a clear strategic vision for bridging TradFi and DeFi. While past fundraising mistakes are acknowledged, they are framed as lessons learned, and the current trajectory is presented as highly promising.

Positives

• The second Digital Asset Treasury (DAT) raise successfully secured $500 million, demonstrating strong market confidence in Ethena's unique structure.
• Ethena's DAT structure, which recycles proceeds into spot purchases, has been well-received by the market, with the foundation actively bidding alongside investors.
• Ethena is growing rapidly, having crossed $10 billion, and is seen as the 'first legitimate competitor' to the established large stablecoin players.
• Ethena's business model is uniquely positioned to benefit from falling interest rates in traditional finance, as its funding rates tend to rise in such environments, offering a 'pseudo equity story'.
• The SPAC structure chosen for the business combination is intended for long-term stability, avoiding shortcuts seen in other vehicles.
• There is significant potential for a 'TradFi to DeFi carry trade' at mega scale, leveraging large fixed-income markets to deploy capital into high-yield DeFi products, creating a unique income stream.
• Digital Asset Treasury (DAT) vehicles are noted for their transparency, with disclosure requirements providing visibility into leverage, mitigating risks seen in past crypto blow-ups.

Negatives

• Guy Young admitted to making 'many mistakes' in past fundraising, specifically raising 'too much at too low a price' and not needing as much capital as was raised during a bear market.
• There is a structural challenge in the crypto market due to insufficient capital in liquid markets to support tokens through their life cycle after Token Generation Event (TGE).
• Skepticism exists regarding the long-term viability of many Digital Asset Treasuries (DATs), with concerns that many will quickly trade below Net Asset Value (NAV).
• MNAV (Market Net Asset Value) compression has impacted other ETH DATs, leading to significant funding reductions for some.
• NASDAQ has expressed concerns regarding 'in-kind contributions' and shareholder votes in some SPACs, indicating potential regulatory scrutiny for vehicles taking 'shortcuts'.

Risks

• The proposed Business Combination may not be completed in a timely manner or at all, which could adversely affect TLGY's securities price.
• Failure by the parties to satisfy the conditions to the consummation of the proposed Business Combination, including shareholder approval and Pubco's listing on a national securities exchange.
• Failure to realize the anticipated benefits of the proposed Business Combination.
• A high level of redemptions by TLGY's public shareholders could reduce Pubco's public float, liquidity, and ability to list shares.
• The insufficiency of the third-party fairness opinion for TLGY's board of directors in determining whether to pursue the Business Combination.
• Failure of Pubco to obtain or maintain the listing of its securities on any securities exchange after closing.
• Risks associated with potential regulatory delays or impediments, or changes in ENA Token prices, affecting the consummation of the Business Combination.
• Costs related to the proposed Business Combination and the process of becoming a public company.
• Changes in business, market, financial, political, and regulatory conditions could impact Pubco's operations.
• The volatile nature of the price of ENA Token and the high correlation of Pubco's stock price to ENA Token price.
• Increased competition in the industries in which Pubco will operate.
• Significant legal, commercial, regulatory, and technical uncertainty regarding ENA Token.
• Risks relating to the treatment of crypto assets for U.S. and foreign tax purposes.
• Difficulties managing growth and expanding operations after the Business Combination.
• Challenges in launching and growing Pubco's ENA Token treasury advisory and digital marketing/strategy services.
• Risk of being considered a shell company by a stock exchange or the SEC, impacting listing and reliance on certain rules.
• The outcome of any potential legal proceedings that may be instituted against Pubco, SC Assets, TLGY, or others following the announcement of the Business Combination.

Future Outlook

Pubco intends to become a publicly traded company following the business combination, with expectations for ENA Token's growing prominence and Pubco's ability to develop a corporate architecture supporting its treasury initiatives. Ethena Labs anticipates a future where its products become investible by traditional finance (TradFi), fostering compliant pathways for large-scale capital to flow from TradFi into DeFi. This includes the potential for a significant 'TradFi to DeFi carry trade' where falling TradFi rates lead to cheaper leverage and rising crypto rates, creating substantial income streams for vehicles that can monetize this spread. The company expects to see an evolution of Digital Asset Treasuries (DATs) into sophisticated vehicles that mobilize TradFi capital for deployment on-chain at scale, benefiting various DeFi protocols.

Management Comments

• "I made many mistakes when it came to fundraising in the last two years... we raise too much at too low a price."
• "We actually didn't need as much money as we did raise."
• "There's just not enough capital on liquid markets to actually carry these tokens from TGE and through their life cycle after that."
• "You need to mature at some point where these things become investible by TradFi."
• "We have a problem. There's not enough capital that's actually bidding these things within crypto. And then you have another problem in TradFi, which is that we don't have other ways to express a long view on the growth of stable coins and digital dollars. So why don't we put those two things together?"
• "The market responded extremely well to that structure [of the DATs]."
• "The foundation saying, we're getting alongside you and sort of bidding in the open market alongside you."
• "We wanted to set it up for something that we thought was built for the long term." (regarding the SPAC structure)
• "Don't buy any of the DATs associated with Ethena if they're above one times NAV."
• "For us, it's really just a distribution play... we just want to open up to those people [in TradFi]."
• "Ethena is a very uniquely interesting catch-up play because we're growing faster. It's like the first legitimate competitor that's actually come up to the big two, i.e. crossing $10 billion."
• "The responsiveness of Ethena to rate cuts is very different to Circle. When rates go down, Circle's business model is actually quite challenged... We tend to see actually like funding rates and the rates on Ethena's product go up at the same period of time when rates go down in the real world."
• "I think ours almost looks like a pseudo equity story rather than something that's like a pure DAT."
• "I think we're going to see a lot of very interesting structures that actually find compliant pathways for capital to come at scale from TradFi into DeFi."
• "As rates fall, your ability to raise leverage from TradFi obviously becomes cheaper... we tend to see actually crypto rates go up in the opposite direction."
• "That income stream, you cannot replicate yourself, right? When you're holding ETH, that can only be like done or put in a package when it's sitting within one of these vehicles." (referring to the TradFi-DeFi carry trade)
• "I don't think it's actually the same because let's say you're raising $5 billion of debt to put it like $5 billion into USDe as some example. You're not actually levering the underlying crypto asset." (addressing concerns about leverage blow-ups)
• "The one thing that's good is that they're all much more transparent vehicles, right? Like we couldn't really see into the balance sheets of all of the entities that blew up last cycle. Well, here it's like you actually have disclosure requirements to be showing to the market."

Industry Context

The crypto industry faces significant challenges with venture capital (VC) token unlocks and a scarcity of liquid market capital to support tokens post-TGE. This has led to a search for new capital sources and structures. Ethena Labs is positioning itself to bridge this gap by creating 'connective tissue' between traditional finance (TradFi) and decentralized finance (DeFi) through Digital Asset Treasuries (DATs). This strategy aims to tap into large pools of TradFi capital that seek exposure to digital assets and stablecoin growth, a demand evidenced by the success of entities like Circle's IPO. Ethena's unique business model, which benefits from falling TradFi interest rates (unlike Circle), offers a differentiated investment thesis. The evolution of DATs into vehicles that can mobilize TradFi debt for DeFi yield strategies represents a significant trend, potentially increasing DeFi's Total Value Locked (TVL) and offering more transparent, regulated pathways for institutional capital compared to past, less transparent crypto entities.

Comparison to Industry Standards

• Ethena is positioned as a 'first legitimate competitor' to major stablecoin issuers like Circle, having rapidly grown to cross $10 billion.
• Ethena's business model offers a distinct advantage over Circle in a falling interest rate environment; while Circle's revenue is challenged, Ethena's funding rates tend to increase, making it a 'pseudo equity story' rather than a pure DAT.
• Unlike many other Digital Asset Treasuries (DATs) which are viewed skeptically and often trade below NAV, Ethena's DATs are primarily a 'distribution play' to provide TradFi access to the underlying asset at or near NAV.
• The strategy of leveraging TradFi debt to deploy into DeFi for a spread is compared to Michael Saylor's MicroStrategy, which justifies a premium for Bitcoin due to its unique ability to raise non-collateralizable, non-liquidatable debt on BTC.
• DATs are presented as having broader mandates than typical ETH staking ETFs, allowing for more flexible and optimized return strategies by acting as 'open-ended hedge funds'.

Corporate Governance

Legal Proceedings

• The company acknowledges the risk of potential legal proceedings that may be instituted against Pubco, SC Assets, TLGY, or others following the announcement of the proposed Business Combination.

Stakeholder Impact

• **Shareholders (TLGY & Pubco):** Will vote on the business combination, face potential share price volatility, and may experience redemptions of TLGY's public shares.
• **Investors (DATs):** Gain access to long-term exposure to Ethena and its growth narrative, with the potential to participate in unique TradFi-DeFi carry trades.
• **Ethena Protocol:** Stands to benefit from increased Total Value Locked (TVL) and growth driven by large-scale capital inflows from traditional finance.
• **DeFi Protocols (e.g., Syrup, Sky, Spark, Aave):** Are identified as major beneficiaries of the rate shift dynamics and increased demand for leverage within DeFi, driven by TradFi capital.
• **Regulatory Authorities:** Will be involved in reviewing the Form S-4 Registration Statement and ensuring compliance with securities laws for the business combination and Pubco's public listing.

Next Steps

• Pubco intends to file a registration statement on Form S-4 with the SEC, including a preliminary proxy statement of TLGY and a preliminary prospectus of Pubco.
• After the Registration Statement is declared effective, TLGY will mail the definitive proxy statement/prospectus to its shareholders for voting at an Extraordinary General Meeting.
• The parties must satisfy closing conditions for the Business Combination, including shareholder approval and the listing of Pubco's securities on a national securities exchange.
• Pubco plans to develop a corporate architecture capable of supporting its treasury initiatives and strategic stake in the Ethena Protocol.
• Ethena Labs will continue to explore and develop compliant pathways for capital to flow at scale from TradFi into DeFi, leveraging structures like the TradFi-DeFi carry trade.

Key Dates

Recommendation

The filing presents a compelling investment case for Ethena Labs through the Pubco SPAC merger. Despite past acknowledged fundraising mistakes, the company has successfully executed a significant $500 million capital raise, demonstrating strong market confidence in its unique Digital Asset Treasury (DAT) structure. Ethena's rapid growth to over $10 billion and its differentiated business model, which benefits from falling interest rates (unlike competitors like Circle), position it strongly in the stablecoin sector. The strategic vision to bridge traditional finance and decentralized finance through compliant, large-scale capital flows, leveraging a profitable TradFi-DeFi carry trade, offers substantial future upside. The transparency of the DAT vehicles also mitigates some inherent crypto risks. For a seasoned investor, this represents a 'strong buy' opportunity for long-term growth in a rapidly evolving and high-potential market segment.

Keywords

Ethena Labs, StableCoinX, TLGY Acquisition Corp, SPAC, Business Combination, Digital Asset Treasury, DATs, DeFi, TradFi, Stablecoin, ENA Token, Crypto, Merger, Capital Raise, SEC Filing