Wintermute Proposes Revenue Sharing Plan for Ethena’s sENA Holders

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As a seasoned crypto investor with over a decade of experience in this dynamic market, I can’t help but feel a sense of déjà vu when I read about yet another project whose growth outpaces its token holders’ benefits. The Ethena Protocol’s situation is reminiscent of some past projects I’ve invested in, where the foundational success seems to bypass those who believed and staked their tokens.

Although the Ethena Protocol is experiencing significant revenue expansion, some token owners aren’t enjoying these profits. In response, the notable crypto market maker Wintermute has proposed a new governance plan aimed at allowing sENA holders to activate a “fee switching” feature.

The proposal, which was submitted on Wednesday, is looking to address what Wintermute calls “an explicit disconnect between sENA holders and the growth of the protocol”.

Governance Proposal Seeks to Link sENA Token Holders with Ethena’s Revenue Growth

Currently, Ethena’s environment primarily revolves around its USD-backed stablecoin, USDe. This digital coin has been performing exceptionally well, leading to its market value exceeding a staggering $2.8 billion. Consequently, USDe has emerged as the primary product of the Ethena protocol, significantly contributing to its income generation.

Surprisingly, despite the promising financial yields suggested, SENA holders who’ve staked their Ethena tokens haven’t managed to reap these profits yet, according to Wintermute’s proposal. In fact, they aren’t currently receiving any direct income benefits as stated in the proposal.

For Wintermute, it’s crucial to handle this matter promptly since it could potentially lead stakeholders to lose interest in the protocol’s future development.

The Proposed Solution

Wintermute’s idea is to initiate a “fee mechanism”, which would involve redirecting some of Ethena’s earnings straight to sENA token holders. However, the proposal doesn’t provide specific details like the exact percentage of revenue allocation or the precise method for distributing these fees among sENA investors. Instead, Wintermute is entrusting Ethena’s risk committee to establish the best structure and guidelines for this fee mechanism. In other words, after the committee has thoroughly evaluated USDe’s expanding supply and its competitive position in the market.

A portion of the plan had Wintermute urging Ethena’s risk team to establish distinct performance and market benchmarks for facilitating the fee adjustment. The suggestion included setting guidelines such as keeping tabs on the circulating USDe supply, assessing protocol earnings, and examining adoption trends on prominent trading exchanges.

As an analyst, I strongly advocated for maximum transparency from the Ethena Foundation regarding the revenue allocation matter. Specifically, I requested a detailed and easily comprehensible report outlining the past distribution of revenues, along with a pledge that future allocations will be made with the protocol’s best interests in mind.

In essence, it seems that the new plan from Wintermute primarily aims for a fairer dynamic: promoting equal growth between Ethena and its governance token owners.

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2024-11-07 11:48