Ethena Foundation Approves Wintermute's Proposal

The Ethena Foundation announced on Friday that Wintermute's proposal to modify the revenue-sharing model of the Ethena protocol has received approval from the risk committee.

"The Ethena Foundation is pleased to share that the Wintermute proposal to enable an ENA fee switch has been approved by the Risk Committee," the foundation stated in a post on X. They added that work would commence with the Risk Committee to finalize the parameters for fee switch activation by November 30, along with implementing specific mechanics.

This approval follows a recent proposition by Wintermute, a crypto market maker, which suggested an updated framework to allocate a portion of the Ethena protocol’s revenue to programs related to staked ENA.

Key Terminology:
– USDe: Ethena’s U.S. dollar-backed stablecoin
– sENA: Staked Ethena governance token

Wintermute's proposal aims to address a perceived disconnect whereby staked ENA holders do not benefit directly from the protocol's revenue despite its significant earnings.

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

The Ethena Foundation responded the next day, acknowledging the potential benefits of the proposal to the overall protocol and ecosystem. They stated that "100% of future revenue earned by the Ethena protocol" will be dedicated to the protocol's growth and will not be shared with any labs or development service providers, including Ethena Labs.

They also clarified that the allocation of Ethena protocol revenue for specific uses outside of sUSDe rewards and the Reserve Fund would be determined through governance.

Last week, Wintermute urged the Ethena Foundation to transparently disclose the historical allocation of protocol revenue, ensuring that it has exclusively benefited the protocol. Furthermore, they requested assurance that future revenue would remain aligned with the protocol's interests and governance under ENA and sENA.

Wintermute is a prominent supporter of Ethena, along with Binance Labs, Fidelity Investments, and Dragonfly, as stated on its website.