Aave proposes to peg Ethena USDe stablecoin to USDT! Community questions: No consideration of conflicts of interest at all.

Aave, a Ethereum lending protocol, proposed on 1/3 to peg the stablecoin USDe of the Stable Coin protocol Ethena to USDT to maintain price stability and reduce market risk. However, many users in the Aave community have opposed this proposal and questioned whether it truly addresses the fundamental issues of stablecoins.

USDe hooks up with USDT to reduce market volatility

Currently, Aave uses Chainlink's oracle to obtain the price data of USDe relative to the US dollar (USD), in order to estimate the value of USDe. The proposal suggests that in Aave's oracle, the price of USDe should be directly set the same as the price of USDT, thereby ensuring that the value of USDe remains consistent with USDT, and using the price data of USDT to provide a stable reference price source for Ethena's revenue-generating coin sUSDe.

The goal is to reduce the impact of secondary market volatility on the Aave ecosystem caused by USDe, while also preventing the risk of loan liquidation due to a drop in USDe price. The proposal supplements that if the USDe price drops by 5%, loans totaling over $300 million with USDe as collateral may be subject to forced liquidation.

The reason for USDe being pegged to USDT

Ethena's USDe is a synthetic Stable Coin supported by on-chain assets and derivatives. It hedges price risks using investors' collateral (ETH) and maintains its peg to the US dollar through perpetual contracts for short selling. By hedging with Delta, it ensures that the returns or losses of any asset are offset against each other, unlike USDT, which relies on US dollar reserves. Currently, USDe has a market value second only to USDT and USDC, with a total scale of $5.83 billion.

The current market value of USDe is $5.83 billion.

Aave users can participate in pledging Stable Coin USDe to obtain pledged representative coins sUSDe, and use Aave's lending function to earn profits. However, since USDe is not a completely pure Stable Coin, its market price may fluctuate, so it is considered a solution to reduce liquidation risk by linking with USDT.

(Stable Coin market value surpasses 200 billion Thai baht to reach a new high, USDe jumps to third place)

The community's response is mixed, questioning whether a rigid hook can solve the root problem.

This news has sparked strong backlash from many users in the Aave community. Some users question what problems would arise if the USDe price is rigidly pegged to USDT, while others question what would happen in the worst-case scenario of an extreme situation.

Users questioned the risk of linking USDe with USDT.

Some users criticize that if Aave insists on pegging the price of USDe to USDT, it would be better to directly set the price of USDe to 1 US dollar. Why peg it to USDT? 'The quality of this proposal is really disappointing, the content inside does not delve into potential conflicts of interest.' Users are venting. The proposal is currently still in the discussion stage and has not yet begun to be voted on.

Some users also criticized the poor quality of the proposals, without thoroughly exploring potential conflicts of interest.

(Ethena launches a new Stable Coin UStb, with BlackRock BUIDL as the asset reserve, to reduce the risk of USD)

The article Aave proposes to hook Ethena USDe Stable Coin with USDT! The community questioned: It didn't consider the conflict of interest at all initially appeared on Chain News ABMedia.