While Ethena’s “synthetic dollar” USDe is gaining popularity, it is also drawing criticism and concerns over potential systemic risks it could introduce to the decentralized finance (DeFi) ecosystem. Although USDe is not officially a stablecoin, it is increasingly being used as such by major DeFi players.
The situation has been brought into focus by an influential MakerDAO community member, known as “ImperiumPaper,” who has highlighted potential conflicts of interest among risk advisors associated with Aave and Maker, who also have ties with Ethena. The analogy used to describe the situation is like “a real estate agent representing both buyer and seller.”
An early-stage Aave governance proposal to peg USDe 1:1 with Tether’s USDT has amplified these concerns. The proposal, which is currently in the “Request for Comments” stage, calls for “hardcoding the USDe price to match the USDT price in Aave’s pricing feeds.” This would replace the current Chainlink USDe/USD oracle and help avoid unprofitable liquidations for liquidators, thereby potentially preventing bad debt for Aave.
However, critics argue that Tether, which is fully backed by off-chain assets, and USDe, backed by a delta-neutral balance of long and short ETH positions, have different risk profiles. The proposal’s co-authors, ChaosLabs and LlamaRisk, have connections with Ethena, which has raised further concerns of a conflict of interest.
ImperiumPaper also expressed similar concerns following a proposal to expose USDS (the rebranded version of DAI) to USDe and sUSDe via Spark. The community member has been critical of Maker, having sold their stake in governance due to a series of concerns including the project’s token MKR’s vulnerability.
In response to the criticisms, Ethena founder Guy Young has denied any conflicts of interest, pointing to the project’s risk committee set up to manage the product’s ongoing management. He also highlighted LlamaRisk’s proposal for stricter measures on the use of sUSDe as collateral on Aave.
But the concerns persist. Ethena’s USDe has been compared to Terra’s UST, which collapsed dramatically in May 2022, causing a bear market in DeFi. This comparison, although perhaps unfair given the different risk profiles of the two assets, underscores the wary sentiment among users who experienced the fallout of UST’s downfall.
Despite the controversy, Ethena shows no signs of slowing down. Young referred to ‘Aavethena’, which saw combined deposits of sUSDe and USDe on Aave surge to a total of $1 billion, as a “nice little proof of concept.” Moreover, a 2025 roadmap titled Convergence was published, outlining Ethena’s plans for further integration with traditional finance to alter the destiny of DeFi.