Wintermute Advocates for Ethena Fee Switch to Support sENA Token Holders

Wintermute, a prominent crypto market maker and liquidity provider, has put forth a proposal aimed at establishing a fee switch framework for the Ethena protocol. The primary goal of this initiative is to align revenue interests with sENA token holders and clarify the protocol's revenue structure.

Details of the Fee Switch Proposal

Wintermute has highlighted that holders of sENA, who have staked their Ethena tokens, currently do not receive direct benefits from the revenue growth of Ethena, despite its success with the USD-pegged stablecoin, USDe. The proposal, submitted to the Risk Committee, suggests that future revenue allocations be directed towards sENA holders to better align their interests with Ethena's financial performance.

While specific figures regarding revenue allocation were not disclosed, Wintermute emphasized the importance of determining the "optimal form" for the fee switch. This consideration is particularly relevant given the increasing supply of USDe and the competitive yields for staked assets.

Additionally, Wintermute advocates for a clear roadmap with milestones, such as circulation and revenue targets, to be established before the implementation of revenue-sharing. They have requested full transparency from the Ethena Foundation regarding the current distribution of protocol revenue and its future management.

“We kindly request that the Foundation provide clarity on whether 100% of Ethena protocol revenue has been allocated or retained solely for the benefit of the protocol so far. Additionally, we ask for confirmation that future revenues will continue to be managed within the Ethena protocol, ensuring they benefit the protocol and remain governed by ENA/sENA.”

Overview of Ethena’s USDe

Ethena operates as a synthetic dollar protocol on the Ethereum network, issuing the stablecoin USDe, which is designed to be a scalable and censorship-resistant digital currency pegged to the USD.

In 2024, USDe has gained significant traction, offering yields of up to 17%, leading to comparisons with the controversial algorithmic stablecoin UST from Terraform Labs, which collapsed two years ago. However, market experts have reassured that USDe’s yield mechanism is distinct and unique.

As of now, USDe's market capitalization has reached $2.83 billion, bolstered by a broader rally in the cryptocurrency market.