Ave proposal to plug Athena’s USDA into USDT sparks community pushback
A new proposal on Aave suggests hardcoding the Ethena USD price to match the Tether USD price feeds on Aave.
The proposal, co-authored by Chaos Labs and LlamaRisk, was submitted on January 3 and seeks to protect Aave users from exposure to secondary market fluctuations. Specifically, LlamaRisk is part of Etena's Risk Committee. The proposal reads:
By linking the USD price directly to USDt, we align the sUSDe oracle with USDt pricing, which ensures seamless integration and avoids disruptions caused by transient price fluctuations in USDE.
Aave (AAVE) is the largest decentralized finance (DeFi) lending protocol, with a total value of $37 billion locked in, that allows users to borrow and lend currencies without intermediaries. Users can deposit assets into Aave's liquidity pools to earn interest or borrow using crypto as collateral.
USDe (USDE), created by Athena, is a synthetic dollar stablecoin backed by onchain assets and derivatives, as opposed to USDT, which relies on fiat reserves. According to CoinGecko, USDE now ranks as the third largest stablecoin with a market cap of $5.85 billion, following USDt (USDT) and USD Coin (USDC).
Related: Ethena USDe Beats DAI to Become 3rd-Largest Stablecoin
Why peg USDE to USDT?
Aave currently uses Chainlink's USD/US dollar price feed for stocked USDe (sUSDe), the stocked version of USDE.
Under the proposal, a 5% drop in USDE rates could put Aave at risk of defaulting on more than $300 million worth of USDE-backed loans. This could trigger the sale of securities to pay off outstanding debt.
“To reduce the risk associated with the USD depeg event, we hardcode the USD price for USDT,” the authors said.
Community response
The proposal has drawn skepticism from Aave users who question whether it addresses fundamental concerns.
Snippet of community feedback on the Aave proposal to hardcode the USDE price to USDT. Source: Aave Governance Forum
“Hardcoding the USD value to the USDT value seems a bit risky as USDe is not really meant to be a stable coin,” user Hazbobo pointed out. “What are the concerns of the last issue? What is the worst case scenario? “
Another community member, Elliottness, criticized the proposal for failing to address the underlying risk factors:
“This is an unfortunate low-quality ARFC without digging into any conflicts between two service providers… In fact, this can be said about every non-hardcoded property listed on the Aave protocol,” he said.
ElliotNess questioned the reasoning behind tying USDE to USDT, suggesting that if Aave plans to hardcode the USD price, it could tie it directly to $1.00 to completely eliminate secondary market price differences.
The proposal is still in the early stages of discussion, with no formal vote yet scheduled.
At the time of publication, AAVE was trading at $340, up 7% over the past 24 hours and up 230% over the past year.
In 2024, Aave's growth was driven by expansion into new markets, including BNB Chain, Scroll, ZKsync Era and Ether.fi. The protocol is expecting further integrations in 2025 with additions such as Sonic, Mantle, Ethereum Layer 2 Linea, Bitcoin Layer 2 BOB, Spider Chain and Aptos.
Etena's 2025 road map
Etena ( ESA ) is up 17 percent after unveiling its 2025 roadmap, which includes plans to merge with Telegram and launch a new dollar-savings product.
The January 3 roadmap introduced iUSDe, a rolled-up version of sUSDe, which currently yields 10%. Etena has announced plans to integrate sUSDe with Telegram, leveraging its 900 million users. The integration will introduce a sUSDe-based payment and savings app, to deliver the “Neobank experience” within the messaging platform.
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