MakerDAO, the governing physique of the favored DAI stablecoin, is considering a considerable allocation of 600 million DAI to the fast-growing USDe artificial greenback stablecoin by way of Morpho Labs. This strategic transfer comes as Ethena Protocol, the platform behind USDe, prepares to launch its native ENA token airdrop.
This choice displays the group’s confidence in USDe’s potential. Moreover, if the proposal involves fruition, it is likely to be a constructive catalyst for Ethena, notably its TVL progress.
USDe Swimming pools Give Extra Advantages to Customers
A complete evaluation by BA Labs, a member of MakerDAO’s advisory council, reveals sturdy consumer demand for USDe-backed lending swimming pools throughout the MakerDAO ecosystem. This choice stems from USDe’s engaging yield-earning potential and the chance to earn ENA tokens.
Moreover, the results of the evaluation recommends specializing in greater leverage USDe swimming pools (86% and 91.5% LLTV) with a proportionally bigger allocation of DAI. Ethena’s revised rewards program reinforces this strategy, favoring USDe over different collateral choices.
Learn extra: What Is Ethena Protocol and its USDe Artificial Greenback?
The strategic redirection of DAI in the direction of USDe swimming pools brings a number of benefits. Notably, it presents decrease liquidity danger for the collateral, as USDe might be redeemed instantly by way of Ethena.
Quite the opposite, sUSDe requires a one-week unstaking interval. Furthermore, this shift permits Ethena to retain a bigger income share for its insurance coverage fund. Finally, it can improve the chance profile of Maker’s Ethena allocation over time.
Whereas the allocation carries inherent dangers related to custody, trade counterparties, and publicity to liquid staking tokens, BA Labs acknowledges steps Ethena took to mitigate these dangers. MakerDAO’s rigorous due diligence additional safeguards the method, making certain a calculated strategy to maximizing returns whereas minimizing potential losses.
Threat Mitigation and Transparency
The evaluation additionally notes the Ethena Protocol’s dedication to sustaining transparency by disclosing collateral breakdowns and deposit addresses.
Nonetheless, to determine additional belief and credibility, the BA Labs crew recommends further measures, reminiscent of improved visibility of futures hedging positions. This additionally contains product and trade breakdowns, and periodic assertions from custodians to confirm the property underneath custody (AUC) that may be attributed to Ethena.
Learn extra: How To Use Ethena Finance To Stake USDe
Ethena’s Collateral Breakdown. Supply: Ethena Dashboard
In response to this important allocation from MakerDAO, Seraphim Czecker, Head of Development at Ethena Labs, expressed his pleasure and confidence.
“Not a joke: MakerDAO contemplating allocating as much as $600m DAI into sUSDe and USDe by way of MorphoLabs with risk to go as much as $1 billion. Ethena TVL progress is on monitor with inside expectations,” Czeker wrote.
In parallel, Ethena Protocol introduced that on April 2, 2024, it can airdrop its native token, ENA, to its neighborhood.
Based mostly on CoinGecko knowledge, USDe, with a market capitalization of $1.56 billion, has climbed to fifth within the international stablecoin rankings, following Tether, USDC, DAI, and FDUSD.