# Reserve Fund The reserve fund acts as an additional margin of safety behind *USDe* to provide a source of capital to pay for periods of negative funding, as well as a bidder of last resort for *USDe* in open markets. ### Composition of Reserve Fund Stable uncorrelated backing assets to cover funding payments in same currency denomination: * Stablecoin assets including USDC and USDT for USD-M contracts * Smaller ETH backing assets allocation for ETH-M contracts * Other assets as determined by governance ### Security of Reserve Funds Controlled by 4/10 multi-sig with keys held by contributors sitting within Ethena Labs. ### USDe Open Market Arbitrage Vehicle Since the solvency of *USDe* is both transparent and provable during all periods of time, if the open market price of *USDe* diverges sufficiently from the provable asset value backing *USDe* in an extreme case then the reserve fund may act as a bidder of *USDe* in the open market. ### Capitalization of Reserve Fund The reserve fund is funded with a portion of the revenue generated by the Protocol, allowing it to grow alongside the backing of *USDe*. The amount of Protocol revenue applied towards the reserve fund is subject to governance. The reserve fund will also be capitalized with funds raised from private placement investors. ## Sizing Ethena Labs conducted detailed modelling in November 2023 on the proposed sizing of the reserve fund under various stressed scenarios to inform the ongoing capitalization of the reserve. The model tested out various assumptions using a $20m fund size. To note, the Reserve Fund size is $46.6m as of Q4 2024. {% file src="/files/gWibLNV09MF5BCqRR8k3" %} --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.ethena.fi/solution-design/reserve-fund.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.