By Nermeen Nabil Khear 
A new proposal to hardcode the price of Ethena’s USDe to match Tether’s stablecoin USDT in Aave’s pricing feed has seen huge pushback from community members. The proposal, jointly authored by Chaos Labs and LlamaRisk claims to protect Aave users from secondary market fluctuations.
According to the proposal, Chaos Labs and LlamaRisk, a member of Ethena’s risk committee, want to align sUSDe Oracle to USDT’s pricing. This would ensure seamless integration, and eliminate disruptions caused by transient price fluctuations in USDe. Aave is one of the biggest decentralized finance (DeFi) lending platforms, boasting a total value locked (TVL) of $37 billion.
The platform allows users to borrow and lend cryptocurrencies without the need for intermediaries. Users can either borrow from Aave and use crypto as collateral, while also depositing into Aave’s liquidity pools for interest.
Ethena’s USDe is a synthetic stablecoin backed by on-chain assets and derivatives. The difference between USDe and USDT is that the latter is backed by fiat reserves. USDe is currently third among stablecoins with a $5.85 billion market cap, just behind USDT and USDC.
Authors detail reasons for the proposal
According to the proposal, Aave uses Chainlink’s USDe/USD price feed to value staked USDe (sUSDe, the staked version of the stablecoin). The setup opens the sUSDe-backed positions up to the USDe’s secondary market price deviation. The proposal noted that the arrangement makes volatility unlikely, but if it happens, it would provide liquidation risks for users and the protocols.
The proposal also said that if USDe suffers a 5% drop in its price, it could put over $300 million in USDe-backed loans on Aave in jeopardy. It could also trigger the sell-offs of collateral debt, which would be used to repay outstanding debts. However, to remove such risks, the authors are providing an improved pricing model.
The authors want a USDT/USD feed to replace the USDe/USD secondary market feed. The proposal noted that decoupling the stablecoin from its short-term fluctuations will reduce all liquidation risks for USDe-backed positions.
“To mitigate the risk associated with a USDe depeg event, we propose hardcoding USDe’s price to USDT,” the proposal reads.
Community backlash and Ethena’s 2025 roadmap
Meanwhile, Aave users showed their disapproval of the proposal, with most asking if the approach tackles fundamental risks. A user Hazbobo pointed out that hardcoding USDe to USDT is risky because the former was not built to be a stablecoin, asking about the risks involved.
Another user, ElliottNess, said the proposal failed to address the risk factors. “This is a disappointingly low-quality ARFC from two service providers without digging into any potential conflicts… Frankly, this can be said of every non-hardcoded asset listed on the Aave protocol,” the user said.
EliottNess asked about the reason why USDe was pegged to USDT, noting that if Aave really wanted to hardcode USDe, it should do a direct peg to $1, a move that will help it avoid deviations totally. Meanwhile, the proposal is in its early stages, and votes have not been called yet.
Aave is also doing well in the market, trading at $340, up 7% in the last 24 hours.
Aave experienced huge growth in 2024, thanks to its expansion into new markets. Aside from the BNB Chain, it moved to Scroll, ZKsync, Era, and Ether.fi. The protocol is also projected to enter into more chains this year, eyeing partnerships with Sonic, Mantle, BOB, Aptos, and a few others, pending approval from its community.
Ethena, on the other hand, saw a 17% rise after releasing its 2025 roadmap. The platform detailed plans to partner with messaging giant Telegram and roll out new dollar savings products this year. The roadmap also announced the wrapped version of sUSDe, the iUSDe, which offers a 10% yield. Ethena wants to benefit from Telegram’s 900 million users with its plan to integrate sUSDe on the platform. The platform will provide a neobank experience within Telegram by offering a payments and savings app.
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This articles is written by : Nermeen Nabil Khear Abdelmalak
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