Hey there, crypto enthusiasts! If you’ve been keeping an eye on the meme token and DeFi space, you’ve probably noticed some wild price swings lately. One token that’s been making waves—and not always for the right reasons—is ENA (Ethena). A recent tweet from Degen Ape Trader broke down how token dilution has impacted ENA, and it’s a perfect case study for anyone looking to understand the ups and downs of cryptocurrency investing. Let’s dive into the details and unpack what this means for you!

What Happened to ENA?

Back in 2024, after its Token Generation Event (TGE), ENA hit an all-time high (ATH) of $1.5, pushing its market cap to a solid $2 billion. Fast forward to July 25, 2025, and the price has dropped to $0.55—a whopping 63% off its peak. But here’s the twist: the market cap has actually climbed to $3.5 billion. How does that work? The answer lies in a key concept called token dilution.

Token dilution happens when the circulating supply of a cryptocurrency increases, often due to new tokens being released into the market. For ENA, the circulating supply jumped from 1.3 billion to 6.3 billion tokens. That’s a fivefold increase! This surge came from factors like:

• Staking Rewards: Tokens distributed through Season 1 to Season 3 farming programs.
• Vesting Schedules: Unlocks for venture capital (VC) investors and the team.

If you held 1 ENA token last year, your share of the total supply is now worth just 1/5 of what it was—pretty eye-opening, right?

Why Does Market Cap Increase Despite a Price Drop?

This is where things get interesting. The market cap is calculated by multiplying the current price by the circulating supply. So, even though the price of ENA fell from $1.5 to $0.55, the massive increase in circulating supply (from 1.3 billion to 6.3 billion) boosted the overall market cap. In simple terms, more tokens in circulation can inflate the market cap, even if each token is worth less.

Think of it like diluting a juice concentrate. If you add more water, you’ve got a bigger total volume, but the taste (or value per unit) gets weaker unless demand keeps up. For ENA, the demand didn’t rise enough to offset the supply increase, leading to that price drop.

The Role of Vesting and Unlocks

Vesting schedules are a common tool in crypto projects to control how tokens are released over time. They’re designed to prevent team members and early investors from dumping their holdings all at once, which could crash the price. However, when those locks expire and tokens are unlocked, it can flood the market—especially if the project didn’t plan for enough demand to absorb the new supply.

For ENA, the unlocks from VC and team allocations, combined with farming rewards, created a perfect storm of dilution. This is a critical lesson: always check a token’s vesting schedule and unlock calendar before investing. Websites like CryptoRank offer tools to track these events, helping you stay ahead of the curve.

What Can You Learn as a Crypto Investor?

So, what’s the takeaway from ENA’s rollercoaster ride? Here are a few tips to keep in mind:

• Check Tokenomics: Look at the total supply, circulating supply, and any planned unlocks. A big gap between these numbers can signal dilution risk.
• Watch Vesting Schedules: Projects with short vesting periods or large unlock events might see price pressure. Longer, gradual unlocks tend to be more stable.
• Balance Supply and Demand: A token’s value depends on whether new buyers can absorb the increased supply. If not, prices can tank.

Degen Ape Trader’s advice to ToniBoiBoi nails it: “Check tokenomic, especially unlock and vesting schedule.” It’s a simple step that can save you from a diluted bag!

The Bigger Picture for Meme Tokens and DeFi

ENA’s story isn’t unique—many meme tokens and DeFi projects face similar challenges as they scale. Dilution can hit hard, but it’s also a natural part of growth for some ecosystems. If you’re into meme tokens, platforms like meme-insider.com are great for staying updated on the latest trends and tokenomics. Understanding these dynamics can help you navigate the wild world of blockchain investing with confidence.

What do you think about ENA’s journey? Have you experienced token dilution with other projects? Drop your thoughts in the comments—we’d love to hear from you!