Letter Ե symbolized the fifth day of creation of the world, when the God “created the great fish of the sea and every living creature that moves, with which the waters swarm, according to their kinds, and every winged bird according to its kind.” In the alphabetic acrostic written by Mashtots, Ե stands for the word Երկնից (Yerknits – from the Heaven, Heavenly). Combined with the preceding word Դատաւոր ([datavor]), it makes up thephrase “Yerknits Datavor” (Heavenly Judge). “Be perfect, therefore, as your heavenly Father is perfect.” (Matthew, 5:48).
Ե denotes a vowel sound. At the beginning of words and after a vowel it is pronounced as “ye”, after consonants – as “e”. As for the graphic form of letter Ե, its prototype is
supposed to be the Greek “epsilon”. Not its classic form (Е), but a rounded, so-called uncial form (Є). To generate the Armenian letter Ե, it was just needed to straighten the epsilon or cut off the arched upper part of it.
See more at Aram Khachaturians "Armenian Alphabet" book