Wintermute’s proposed solution is to activate a “fee switch”, which would allocate a portion of Ethena’s revenue directly to sENA holders.
Despite the fact that the Ethena Protocol continues to see its revenue grow massively, some of its token holders are not reaping any of the benefits. This has prompted the prominent crypto market maker Wintermute to introduce a new governance proposal that seeks to enable a “fee switch” for sENA holders.
The proposal, which was submitted on Wednesday, is looking to address what Wintermute calls “an explicit disconnect between sENA holders and the growth of the protocol”.
Governance Proposal Seeks to Link sENA Token Holders with Ethena’s Revenue Growth
Ethena’s ecosystem is currently focused on its US dollar-pegged stablecoin, USDe, and has been thriving really well. The stablecoin has a market capitalization that exceeds $2.8 billion and has become the core product of the Ethena protocol, helping the protocol to drive significant revenue.
Interestingly, however, these strong financial returns have somehow continued to elude sENA holders. That is, those who have staked their Ethena tokens. These holders currently receive no direct revenue benefits as Wintermute claims in its proposal.
For Wintermute, the situation is one that must be addressed immediately, seeing as it may cause stakeholders to be disinterested in the protocol’s long-term growth.
The Proposed Solution
Wintermute’s proposed solution is to activate a “fee switch”, which would allocate a portion of Ethena’s revenue directly to sENA holders. The proposal, however, does not come with specific terms, such as the percentage of revenue allocation or the exact mechanism for distributing fees to sENA stakeholders. Instead, Wintermute is leaving the decision to Ethena’s risk committee to determine the optimal structure and guidelines for the fee switch. That is, after the committee must have taken USDe’s growing supply and its competitiveness into full consideration.
Part of the proposal also saw Wintermute calling for Ethena’s risk committee to set clear performance and market conditions for enabling the fee switch. The proposal did suggest some parameters including tracking the circulating supply of USDe, monitoring protocol revenue levels, and evaluating adoption rates on major trading platforms.
Finally, Wintermute urged the Ethena Foundation to be as transparent as possible with this revenue allocation issue. The crypto market maker asked for a clear report on historical revenue distribution and a commitment that future allocations will be done in line with the protocol’s interests.
Overall, Wintermute’s latest proposal appears to seek just one thing: to create a more balanced relationship between Ethena’s growth and its governance token holders.
next