Ethena airdrop goes live as MarkerDAO proposes to allocate $600 million into USDe and sUSDe

Decentralized finance protocol Ethena’s (ENA) total value locked (TVL) surged more than 1,700% since the beginning of the year to over $1.57 billion on Tuesday as high yield and airdrop fuel growth in its ecosystem. Following Ethena's success, lending platform MakerDAO is looking to allocate 600 million of its decentralized stablecoin DAI to USDe and sUSDe, according to a proposal on the MakerDAO forum.

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Ethena’s growth since launch

Ethena Labs launched the mainnet version of its USDe synthetic stablecoin on February 19 after raising a round backed by Dragonfly, a venture capital firm, and others. This follows an earlier round of $6 million raised from Binance Labs, Bybit, OKX Ventures, Gemini, etc.

When Ethena's USDe went live promising a 27.6% yield, a large part of the crypto community raised their eyebrows considering the collapse of Terra's UST algorithmic stablecoin, which offered similar high yields. However, Ethena's team has said that USDe works differently from UST.

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According to documents on its homepage, Ethena maintains the USDe peg and generates high yields by collateralizing it with staked Ethereum and delta hedging those assets with short positions of Ethereum on centralized exchanges. The document states that the yields come from the staked Ethereum and funding fees received in those short positions. As a result of its high-yield offerings, Ethena's total value locked (TVL) has skyrocketed to $1.57 billion, according to data from DeFiLlama.

Another factor propelling Ethena's growth is the anticipation of the airdrop of its governance token, ENA. The airdrop went live on Tuesday, rewarding holders of USDe with 750 million ENA tokens, which constitute 5% of its total supply. Prominent exchanges like Binance, Bybit, and Bitpanda also listed the tokens for trading on their platforms.

ENA airdrop goes live amid MakerDAO’s DAI allocation

The airdrop coincides with a proposal by Spark SubDAO on the MakerDAO forum that will see 600 million of its DAI tokens allocated to Ethena’s USDe and staked USDe (sUSDe) through Morpho Labs. "This will scale up gradually as Ethena grows, but for the time being, we believe it is prudent to cap total allocation at this level," the proposal stated. Such a move will see Ethena's TVL grow significantly. Ethena has also said it's looking to diversify its delta hedging into Bitcoin in the coming months.

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However, Spark SubDAO's recent proposal has drawn criticism from Marc Zeller, co-founder of Aave, who considers the move "reckless." He further went on to write on proposal to remove DAI's collateral status on Aave.

Another crypto analyst, TardFiWhale.eth, who is known for predicting UST’s fall, has also posted a thread on X hinting that there are several risks in Ethena USDe, especially with the potential move from MakerDAO.