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 through Morpho Labs. This strategic transfer comes as Ethena Protocol, the platform behind USDe, prepares to launch its native ENA token airdrop.
This resolution displays the group’s confidence in USDe’s potential. Moreover, if the proposal involves fruition, it is likely to be a optimistic catalyst for Ethena, notably its TVL development.
USDe Swimming pools Give Extra Advantages to Customers
A complete evaluation by BA Labs, a member of MakerDAO’s advisory council, reveals robust person demand for USDe-backed lending swimming pools inside the MakerDAO ecosystem. This choice stems from USDe’s enticing 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 method, 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 provides decrease liquidity threat for the collateral, as USDe will be redeemed instantly through 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 should improve the danger profile of Maker’s Ethena allocation over time.
Whereas the allocation carries inherent dangers related to custody, alternate 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 method to maximizing returns whereas minimizing potential losses.
Danger 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 staff recommends further measures, corresponding to improved visibility of futures hedging positions. This additionally consists of product and alternate breakdowns, and periodic assertions from custodians to confirm the property beneath 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 vital 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 through MorphoLabs with chance to go as much as $1 billion. Ethena TVL development is on monitor with inner expectations,” Czeker wrote.
In parallel, Ethena Protocol introduced that on April 2, 2024, it should airdrop its native token, ENA, to its group.
Based mostly on CoinGecko information, USDe, with a market capitalization of $1.56 billion, has climbed to fifth within the world stablecoin rankings, following Tether, USDC, DAI, and FDUSD.
