The Ethena Labs community is set to vote on a proposal to integrate Ethereal, a decentralised exchange on the Ethena Network, into its reserve management system.
The move aims to boost the “utility and demand” for USDe, Ethena Labs’ synthetic stablecoin.
A proposal submitted by “Fells0x” on September 30 seeks approval to have Ethereal manage spot and perpetual futures positions that back USDe, Ethena Labs’ stablecoin. If the proposal is accepted, Ethena token holders could receive 15% of any future Ethereal governance tokens.
Ethereal V1, set to launch on testnet in Q4, aims to provide centralized exchange-level performance while ensuring “complete self-custody,” according to the proposal. The exchange’s architecture is designed to handle up to 1 million operations per second with latency under 20 milliseconds.
“Ethereal’s launch will provide the blueprint for other applications built using USDe on the Ethena Network, helping to drive Ethena’s transformation from an asset issuer to a platform for financial innovation,”
Fells0x’s proposal read.
The proposal also highlights potential future synergies, such as decentralised lending and borrowing applications built on top of USDe, further expanding the utility and ecosystem of the synthetic stablecoin.
Fells0x has also called for technical assistance from the Ethena Foundation and Risk Committee to facilitate the seamless integration of Ethereal into Ethena’s hedging strategies, pending approval. While the vote is anticipated in the coming months, an exact date has not yet been confirmed.
Meanwhile, industry figures such as Andre Cronje had raised concerns about a key vulnerability in USDe’s system, specifically its reliance on income-generating assets like staked Ethereum (stETH) as collateral. He compared this flaw to the mechanisms behind Terra’s collapse, highlighting the potential risks in complex financial products without clear risk mitigation.
In response, Ethena Labs founder Guy Young (Leptokurtic) acknowledged the validity of Cronje’s concerns and promised definite updates.
The proposal also comes on the heels of Ethena’s recent unveiling of UStb, a BlackRock-backed stablecoin designed to mitigate concerns surrounding USDe. Supported by BlackRock’s USD Institutional Digital Liquidity Fund and private lender Securitize, UStb was introduced to counter systemic risks in negative funding rate scenarios.
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