[TEMP CHECK] Onboard sUSDe to Aave V3 on Ethereum

Title: [TEMP CHECK] Onboard sUSDe to Aave V3 on Ethereum

Author: Ethena & ACI (Aave Chan Initiative)

Date: 2024-03-04


Ethena is seeking community support for adding sUSDe to Aave V3 on Ethereum.


Ethena is a synthetic dollar protocol built on Ethereum that will provide a crypto-native solution for money not reliant on traditional banking system infrastructure, alongside a globally accessible dollar denominated savings instrument - the ‘Internet Bond’.

Ethena’s synthetic dollar, USDe, provides a stable crypto-native solution for money achieved by delta-hedging staked Ethereum collateral. USDe is fully collateralized and free to compose throughout DeFi.

USDe peg stability is ensured through the use of delta hedging derivatives positions against protocol-held collateral.

sUSDe is the staked version of USDe which earns yield from the protocol.

USDe has already seen extensive use throughout DeFi, making this an interesting asset to onboard to Aave v3.

For example, liquidity on Curve is already over >100m:

USDe is currently the 4th highest volume asset in the whole of Ethereum behind ETH, USDC, USDT: Uniswap Interface

There are also many synergies between USDe and GHO. The GHOTHENA pool is currently the deepest liquidity pool for GHO on chain and Ethena is looking to build a cooperative relationship to grow together.

Because of sUSDe’s high yield, it is expected that its addition as collateral will create strong borrow demand for looping strategies similar to sDAI.


USDe derives its peg stability from executing automated and programmatic delta-neutral hedges with respect to the underlying collateral assets.

Hedging the price change risk of the collateral asset in the same size ensures the change in value of the collateral asset is offset by the change in value of the hedging leg.

This ensures the synthetic USD value of the collateral remains relatively stable in all market conditions.

Considering the recent launch of sUSDe and current scaling plans, further proposals will suggest conservative LTVs and borrow caps in order to thoughtfully scale sUSDe as collateral.

Key Information

  • Users are able to acquire USDe in permissionless external liquidity pools.
  • Approved parties from permitted jurisdictions who pass KYC/KYB screening are able to mint & redeem USDe on-demand with Ethena Labs contracts directly which will include only market making entities.
  • There is no reliance upon traditional banking infrastructure as trustless collateral is held and stored within the crypto-system. USDe is fully backed by users’ deposits at all times.
  • Users are also able to complete Cross Market Arbitrage by minting & redeeming USDe with Ethena and trading USDe in external markets such as Binance or Curve pools to capture price dislocations.


The protocol is exposed to various risks including but not limited to:

  • Smart Contract Risk
  • External Platform Risk
  • Liquidity Risk
  • Custodial Operational Risk
  • Exchange Counterparty Risk
  • Market Risk

Useful Links:


Ethena documentation

Twitter links

Fundraising news


This proposal is powered by Skywards. The Aave Chan Initiative is not directly affiliated with Ethena and did not receive compensation for creation this proposal.

Next Steps

  1. If consensus is reached on this [TEMP CHECK], escalate this proposal to the Snapshot stage.
  2. If the Snapshot outcome is YAE, this proposal will be escalated to ARFC stage.
  3. Publication of a standard ARFC, collect community & service providers feedback before escalating proposal to ARFC snapshot stage.
  4. If the ARFC snapshot outcome is YAE, publish an AIP vote for final confirmation and enforcement of the proposal.


Copyright and related rights waived under CC0


Supporting this proposal


We are supporting this Proposal.
@ACI can you elaborate on which Oracle will be used?

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The current proposal has been escalated to TEMP CHECK Snapshot.

Voting will start tomorrow, we encourage everyone to participate.


@ACI care to answer this ?


Some comments for the Ethena team - it’d be great to gain further clarity before voting on this proposal!

  • Could you please expand upon how the USDe stablecoin achieves its peg? There is no mention of the platforms used by USDe to execute its delta hedging strategy, nor any explanation of the risks associated with this strategy. The automated and programmatic nature of the hedges needs to be explained in greater detail as well.
  • While synergies with GHO are mentioned, these should be made clearer.
  • The sUSD APY is extremely high - where this emanates from is not clear - can you please expand upon this?

Hi Sid, I would also love to hear comments from Ethena but I can recommend to you reading Arthur Hayes latest substack article. He explains quite good how Ethena works.


Thank you for the recommendation ser, will do!

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Are there centralization risks? It would be helpful if the Ethena team could comment on some of these risks.

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Same risks as with USDC or USDT. Ethena is not trying to be decentralized in any way. It’s operating mostly on CEX for their short positions and the rest is being staked for example with Lido.

After understanding their mechanism I would say they are not better or worse than USDC or USDT, but they simply have another approach, another business model with their token and another way to back it.

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Following Snapshot monitoring, the current TEMP CHECK Snapshot has just ended, without reaching Quorum, but YAE as winning option with 289K votes.

Therefore, the TEMP CHECK Snapshot has NOT passed as Quorum was not reached or 320K votes for winning option.

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After review, considering that Snapshot had no strong NAY opposition and that Quorum was really close, it has been decided to post again the TEMP CHECK Snapshot.

Vote will start tomorrow, we encourage everyone to participate and vote.


I agree to restart the voting, but at ARFC stage I would like to see @ChaosLabs to comment on the risks of sUSDe. See these here Risks | Ethena Labs


Any updates?maybe go to the arfc stage?

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The TEMP CHECK Snapshot is still active, you can check at TEMP CHECK Snapshot.

Nevertheless seems it will pass, but we will be to continue monitoring it so when it ends on Mar 19, 2024, 1:59 PM, we’ll post definitive result and next steps.

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Following snapshot monitoring, and per our previous comment, the current TEMP CHECK Snapshot ended recently, reaching this time both Quorum and YAE as winning option, with 495K votes.

Next step will be the publication of an ARFC to continue gathering community feedback as well as risk service providers.

1 Like

Supporting this definitley - most dynamic product alomng with Tia, Eigen pendle - things are
more exciting than ever

1 Like

This proposal has been escalated to the ARFC stage and this thread will be closed.