Aave’s new USDe proposal sees pushback from the community
The post Aave’s new USDe proposal sees pushback from the community appeared on BitcoinEthereumNews.com.
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.…
Filed under: News - @ January 4, 2025 2:20 pm