Ethena Labs, an Ethereum-based synthetic dollar ecosystem, is in the news following a report pointing out that it recently staked 180 million ENA tokens for its Season 3 crypto-farming event, which offered fewer rewards for other stakers. Crypto investigator Nomad alarmed the community on October 27, alleging that the Ethena team held about 25 percent of the overall staked ENA (SENA) for use within the event to harvest Sats earned by actions within the Ethena platform.
Alert: Important Notice for ENA/USDe Holders
The Ethena team is currently using 180M ENA tokens (25% of SENA supply that earns sats) to farm sats in Season 3, effectively diluting other participants’ rewards. This raises significant concerns about the team’s ethics.
A thread
— Nomad (@Nomad02887202) October 27, 2024
Ethena offers an example where such a significant stake could significantly reduce returns for ordinary stakers and hence claims that using the USDE token demonstrates that the team is an evil one. As for misconduct, Ethena Labs has been mum about it all, though they have not provided an official statement.
Nomad’s analysis followed the flow of ENA tokens and reportedly associated six pocket addresses with Ethena Labs. These wallets were also said to have received 180 million ENA tokens from Coinbase Prime Custody in October. This transfer came after the September launch of SENA staking, and both of the wallets have since been featured on Ethena’s Sats farming leaderboard, showing active participation in the rewards system.
Ethena sats leaderboard shows
0xB6dcCA1e6F3aB04B899cBf30cFcE22E6F9272C9F ranks 17th with 33.6B sats
0xC4bf1D0e09c400891ed780652b75b93fEE2c704e ranks 20th with 32.2B sats
0x1cF0Bc14FB1f9d0a3620d99bAA624944634d8AA5 ranks 24th with 28.8B sats…
— Nomad (@Nomad02887202) October 27, 2024
Nomad’s research argues that these wallets, likely owned by Ethena Labs, acquired 20% of Ethereal (ETRL) points, a reward reserved for contributors. Davis’s accusations have created ripples in the crypto space, and many users on X have called on Ethena Labs to devise a solution.
We are aware of questions circulating in Discord and X as to whether investors or the Ethena team are earning Ethereal rewards via sENA using locked tokens.
We would like to categorically confirm to our community that absolutely no locked team or investor tokens are staked as… pic.twitter.com/v5SxgDwCTp
— Ethena Labs (@ethena_labs) October 28, 2024
Ethena’s Previous Farming Issues Cast Doubt on Reward Practices
Nomad also pointed out problems from other farming incidents that occurred in Ethena Season 1 and Season 2, which reportedly caused several users to lose money. This history, increasing with the current accusations, also raised doubts and criticisms of the protocol’s reward distribution and community engagement approach.
In response, Ethena has come out to defend itself, arguing that the staked ENA tokens are unlocked foundation tokens that were legally staked. Ethena Labs stated that further explanations would be made to dismiss the allegations.
However, this year, Ethena Labs has partnered with algorithmic trading firm Wintermute, which now takes USDe issued by Ethena as a margin to trade cryptocurrencies over the Counter. Wintermute clients can use USDe to hedge options, CDS, forwards, and spots, which act as collateral. This partnership, finalized on October 25th, comes in handy in showcasing Ethena’s growth in the digital asset sector even in the wake of the backlash.
While the crypto community waits for newer developments, Ethena Labs continues to receive attention. Therefore, they must respond to these allegations to retain users’ confidence during these trying times.
This news is republished from another source. You can check the original article here
