Wintermute Proposes Fee Switch for Ethena

Crypto market maker Wintermute posted a new governance proposal on Wednesday aimed at enabling the fee switch for Ethena (ENA) holders.

>The Ethena Protocol has and continues to generate substantial amounts of real revenue, indicating a clear level of product-market fit for USDe,” the proposal noted. “Unfortunately, sENA does not directly benefit from this revenue, resulting in an explicit disconnect between sENA holders and the growth of the protocol.”

USDe is Ethena’s U.S. dollar-pegged stablecoin with over $2.8 billion in market capitalization, while sENA is the staked Ethena governance token. To address this disconnect, Wintermute proposed a plan to Ethena’s risk committee that would allocate a portion of Ethena protocol’s revenue for sENA and related programs.

However, the proposal did not specify details like the percentage of revenue allocation or the fee switch mechanism. Instead, Wintermute suggested that Ethena consider the “optimal form” of the fee switch in light of USDe’s growing supply and the competitiveness of staked USDe’s yield.

The proposal further urged Ethena’s risk committee to present a set of parameters for the community to meet before activating the fee switch, including the circulating supply of USDe, gross or average levels of protocol revenue, and USDe’s adoption on key distribution platforms.

Wintermute called for the Ethena Foundation to transparently disclose the historical allocation of protocol revenue, ensuring it has only benefited the protocol. They also requested confirmation that future revenue will continue to benefit the protocol's interests and remain governed by ENA and sENA.

According to Token Terminal data, the Ethena protocol boasts a fully diluted market capitalization of $4.93 billion and an annualized revenue of nearly $150 million.