Proposal to Onboard sUSDe to World Liberty Financial Aave Instance

General
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Summary

This proposal aims to enable sUSDe as an eligible collateral asset for World Liberty Financial’s (WLFI) Aave v3 instance. Introducing sUSDe to the instance will allow the instance to benefit from the TVL and user base of Ethena, alongside the utility of facilitating an increase in utilization for stablecoin deposits. The Ethena Foundation has agreed to co-incentivize deposits of sUSDe should the proposal pass, allowing for additional market growth.

This proposal is subject to the World Liberty Financial Aave instance being fully approved and going live, as dictated by Aave governance.

Background

sUSDe has seen strong growth in Aave since its onboarding to Aave E-Mode on both the Aave Core and Lido instances in mid November, reaching ~$1.2 billion in supplied assets in under a month. The integration also simultaneously increased stablecoin deposits into both instances due to sUSDe’s popularity as a collateral asset to borrow stablecoins like USDC, USDT, and USDS.

Upon sUSDe’s onboarding, Aave Core’s and Lido’s supply rate for USDC, USDT, and USDS saw an immediate and marked increase, facilitating additional deposits due to a considerable increase in demand. Because of sUSDe’s relative reward rate compared to historical Aave stablecoin borrow rates, users appear to be depositing sUSDe as collateral, then subsequently borrowing stablecoins–capturing a spread.

sUSDe has had an effective multiplier effect on rates across Aave markets: currently, $1B of sUSDe onboarded to Aave Core have almost doubled the supply rates on over $5 billion of USDC, USDT, and USDS liquidity.

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USDC supply rate, inflection point was when Aave governance introduced sUSDe as collateral.

This same dynamic can benefit the World Liberty Financial market and ensure that the rates are in line with broader DeFi market rates. If the World Liberty Financial instance rates are poor relative to the broader market, then the instance may struggle to attract deposits.

As World Liberty Financial’s Aave instance comes to market as and when approved here, sUSDe being onboarded as collateral presents a growth lever for this market and World Liberty Financial stakeholders to benefit from. With sUSDe, the platform can capture a broader range of users seeking higher on-chain reward rates, diversifying its user base but also solidifying World Liberty Financial’s position as a premier destination for stablecoin lending and borrowing while growing core metrics like TVL.

Implementation Proposed

We propose the implementation of sUSDe as the first new collateral asset to the World Liberty Financial market. sUSDe has already passed risk analysis on the Aave Core and Lido instances. However implementation market configurations will be determined by Risk Service Providers, also supporting the World Liberty Financial Aave instance.

Should this proposal pass and be implemented, the Ethena Foundation is willing to co-incentivize supply of sUSDe to come to the instance via its points program, making World Liberty Financial users eligible for additional Ethena Rewards on top of sUSDe native reward APY.

This also helps set the stage for a world where Aave E-Mode can be activated on the World Liberty Financial Aave instance, as introducing sUSDe should facilitate the onboarding of additional market liquidity. This proposal also seeks to pre-approve sUSDe’s eligibility for liquid E-Mode on the World Liberty Financial instance.

This proposal also requests WLF token rewards to users for sUSDe deposits in the instance, similar to the rewards being provided to users with other collateral on the platform. WLF token rewards, combined with Ethena rewards, should create a compelling reason and competitive advantage for users to use World Liberty Financial.

Benefits for World Liberty Financial & Aave

To summarize:

  • World Liberty Financial users will enjoy improved rates on their stablecoin collateral
  • The World Liberty Financial instance will see increased capital flows and ability to attract stablecoin deposits
  • Increased utilization will lead to increased reserve factor accrual for World Liberty Financial and Aave DAO
  • World Liberty Financial will be able to tap into Ethena’s growth funnel and connections across DeFi, aligning with liquidity providers, power users, and the wider retail audience

Specification

  • WLFI will utilize the same reserve factor system in this Aave v3 instance as is maintained in the main Aave instance.
  • The Aave risk managers will set and dynamically adjust sUSDe supply caps and other parameters based on stablecoin liquidity and other market needs

About Ethena

Ethena is a synthetic dollar protocol built on Ethereum, providing a crypto-native dollar-denominated form of money, USDe. The supply of USDe has grown to nearly $6 billion in TVL, making it the third-largest dollar-denominated crypto asset globally, behind just USDT and USDC.

Launched in early 2024, Ethena has rapidly grown to become one of the most well-integrated protocols across DeFi. Today, Ethena works closely with Aave, EigenLayer, EtherFi, Sky, Pendle, Morpho and Curve.

Ethena Labs has been backed by Dragonfly, Binance Labs, Bybit, OKX Ventures, Fidelity Ventures, and Franklin Templeton.

Website: ethena.fi

Documentation: https://docs.ethena.fi/

Ethena Labs Twitter: x.com

160 Likes
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Very good point & idea

13 Likes
3

okkkkkkay！Keep building

12 Likes
4

sounds very good, lfg :point_up:

13 Likes
5

just do it, I believe you all the time

12 Likes
6

Great.do it.Looking forward to this.

10 Likes
7

LFG – Bullish on $ENA and $WLFI!

16 Likes
8

I think it’s a very good suggestion.

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[quote=“osechi, post:8, topic:2039, full:true”]
I think it’s a very good suggestion.

2 Likes
10

Quá tuyệt vời, tôi thấy nó rất hữu ích cho sự phát triển của WLFI

2 Likes
11

Sounds really good! Let’s discuss!

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Against :-1:

Per Grok, there are notable controversies associated with Ethena Labs:

https://x.com/i/grok/share/T9iir9DKtyUbnOrU2D3JLR9Mp

Ethena Labs, the team behind the synthetic dollar protocol USDe built on Ethereum, has faced several controversies since its inception. These issues have sparked debates within the crypto community about the project’s transparency, ethics, and long-term viability. Below is an overview of some notable controversies associated with Ethena Labs, based on available information and sentiment expressed online.

One prominent controversy revolves around accusations of Ethena Labs misusing 180 million ENA tokens during a farming event in Season 3, as raised by a crypto investigator known as “Nomad” in late 2024. Nomad alleged that the Ethena team controlled approximately 25% of the staked ENA supply, using it to farm “Sats” rewards and diluting the benefits for other participants, particularly USDe holders. This claim suggested that six wallets linked to Ethena Labs received these tokens from a Coinbase Prime Custody account, accumulating significant rewards at the expense of the broader community. While this accusation stirred concerns about fairness and transparency, there has been no definitive public resolution or official response from Ethena Labs confirming or refuting these claims as of the latest updates.

Another significant issue emerged in early 2025 when Germany’s financial regulator, BaFin, intervened regarding USDe’s compliance with the European Union’s Markets in Crypto-Assets (MiCA) regulations. BaFin identified “serious flaws” in Ethena’s operations, suspecting that the staked version of USDe (sUSDe) might constitute an unregistered security. This led to a regulatory crackdown, including frozen reserves, blocked websites, and the appointment of a special overseer. The move highlighted potential risks in Ethena’s yield strategy and raised questions about its regulatory preparedness, especially given its rapid growth and billions in total value locked (TVL). Posts on X reflected this sentiment, framing it as a cautionary tale for decentralized finance (DeFi) projects to prioritize compliance alongside innovation.

Ethena Labs also faced scrutiny over its high-yield offerings, which have drawn comparisons to the failed Terra-LUNA ecosystem. USDe’s annualized yield, at times exceeding 30%, prompted skepticism about its sustainability, with critics pointing to risks like counterparty blowups or a reversal of funding rates in bearish markets. Founder Guy Young has publicly addressed these concerns, distinguishing USDe from Terra’s UST by emphasizing its full collateralization and delta-hedging strategy. However, the high yield and complex mechanisms—like tokenized cash-and-carry trades—continue to polarize opinions, with some viewing it as innovative and others as a potential red flag reminiscent of past crypto collapses.

Additionally, communication missteps have plagued Ethena Labs. In February 2024, a press release about a $14 million funding round led by Dragonfly and involving high-profile investors was marred by inaccuracies. An initial version included names like PayPal Ventures and Franklin Templeton, which were later removed, leading to confusion and accusations of misleading hype. Ethena clarified that the errors stemmed from a draft circulated by their PR firm, Wachsman, but the incident damaged trust for some observers. Earlier, in March 2024, community backlash erupted when Ethena allegedly reduced users’ yield by two-thirds in the protocol’s first week, only reversing the decision after outcry on social platforms—a move that led to bans on their Discord server for dissenting voices, further fueling perceptions of poor governance.

Finally, a reported frontend hack on Ethena’s official website in September 2024 raised security concerns. Detected by PocketUniverseZ on X, the hack involved phishing transactions aimed at stealing users’ tokens, prompting warnings to the community. While not directly attributed to Ethena’s core protocol, it underscored vulnerabilities in user-facing infrastructure.

These controversies—ranging from token misuse allegations and regulatory hurdles to high-yield skepticism, communication blunders, and security incidents—paint a picture of a project with ambitious goals but significant challenges. Ethena Labs has positioned USDe as a crypto-native alternative to traditional stablecoins, backed by prominent investors like Arthur Hayes and Dragonfly, yet its path has been anything but smooth. The lack of conclusive evidence resolving some of these issues, such as the ENA token farming dispute, leaves room for ongoing debate about its credibility and future in the DeFi landscape.

4 Likes
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Love this! As much implementation happens that will be better for the whole community.

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14

Very good! I believe you all the time. Lets go!

3 Likes
15

Nice point here. It would be interesting.

2 Likes
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Definitely for it! Recent Bybit moment showed the professionalism

2 Likes