Summary
LlamaRisk supports the latest proposal from Chaos Labs further to refine the E-mode configuration for Pendle Principal Tokens. This proposal builds upon the previously published ARFC addendum, which suggested PT underlying assets to be added as borrow-only to the existing “Stablecoins” E-modes.
User-Experience Enhancement
This purely technical change is designed to improve capital efficiency and reduce user friction. By allowing USDe as a borrowable asset within the general Stablecoin E-modes, users can seamlessly switch their debt between USDe and other stablecoins (like USDT/USDC) without completely unwinding and re-establishing their leveraged positions. This enhances the user experience, eliminates the need to route debt swaps through the secondary market liquidity, and could lead to more stable borrowing rates across the protocol.
Continuity with Previous Proposal
This concept is an iteration of the improvements discussed in the original addendum, [ARFC ADDENDUM] Modify E-Modes for PT Token Collateral. While the initial proposal focused on enabling rollovers, this addition addresses the user journey for debt management during the lifetime of the position. We view this as a minimal incremental risk, a high-impact enhancement that aligns with our goal of optimizing risk parameters while improving protocol usability.
Notably, the previous addendum has not been implemented onchain, with no PT Stablecoins E-mode currently containing the underlying asset (USDe or sUSDe).
Source: Aave Dashboard, June 17, 2025
Disclaimer
This review was independently prepared by LlamaRisk, a community-led decentralized organization funded in part by the Aave DAO. LlamaRisk LlamaRisk serves as Ethena’s Risk Committee member and an independent attestor of Ethena’s PoR. LlamaRisk did not receive any compensation from the protocol(s) or their affiliated entities for this work.
The information provided should not be construed as legal, financial, tax, or professional advice.