Ethena Protocol Approves Wintermute’s Fee-Sharing Proposal for ENA Token Holders

Highlights:

• Ethan Protocol approved their fee-sharing proposal for ENA with sENA holders in line with their revenue growth.
• The fee-sharing proposal, however, suggests turning on a fee switch by November 30 to benefit holders of staked governance tokens.
• The Wintermute proposal guarantees that future revenues will only flow to the protocol, enhancing transparency and stakeholder alignment.

Ethena Protocol has approved Wintermute’s fee-sharing proposal for ENA holders. Its aim is to match protocol income growth with sENA holders. Though specific implementation details will be revealed later, changes will start before the end of November.

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November 30 Fee-Switch Activation

Wintermute, a well-known market maker and Ethena supporter presented the fee-sharing proposal to help to balance the Protocol’s financial viability with the interests of sENA holders. Supporting the USDe stablecoin, Ethena Protocol has seen a substantial revenue growth. However, sENA stakeholders did not directly benefit from this success.

The Ethena Foundation said it will start the fee switch by November 30 in order to solve this problem. Ethena’s fee-sharing proposal for ENA calls for allocating some of its revenues to initiatives enhancing the value and usability of staked governance tokens. This step is intended to reinforce the interaction between ENA holders and the protocol’s performance.

The Ethena Foundation is pleased to share that the @wintermute_t proposal to enable an $ENA fee switch has been approved by the Risk Committee

The Foundation will be working with the Risk Committee to crystallize parameters for fee switch activation by 30th November, with…

— Ethena Foundation (@EthenaFndtn) November 15, 2024

Wintermute also requested that Ethena evaluate the proper configuration of the fee switch, as the USDe supply is increasing, and the staked USDe returns are becoming more competitive. Furthermore, Wintermute asked Ethena Foundation to disclose past revenue allocations to maintain transparency while ascertaining that all earnings have solely benefited the protocol.

Enhancing Alignment and Transparency

Wintermute emphasized that sENA holders should better align with the protocol’s financial outcomes. The ENA fee-sharing proposition resolves this by guaranteeing that future protocol revenues are exclusively allocated to the protocol. However, Ethena Foundation reiterated these concerns and committed to maintaining transparency in revenue allocation.

The foundation recently clarified that Ethena will not distribute any of its revenue to external entities or affiliated development groups, including Ethena Labs. The governance processes based on ENA and sENA voting structures will determine the use of resources available beyond operational reserves and rewards to sUSDe holders.

The risk committee is collaborating with the foundation to finalize the mechanics of the new revenue-sharing model. The foundation expects to release precise by November 30, with all activation parameters already set.

Impact on the Ethena Ecosystem

The approval of Wintermute’s fee-sharing proposal for ENA is a major step towards aligning incentives within the Ethena ecosystem. Ethena intends to activate the fee switch to guarantee that sENA holders directly benefit from the protocol’s revenue growth.

Some of the big industry players, like Binance Labs, Fidelity Investments, Dragonfly, and Wintermute, have contributed to Ethena’s ecosystem. This development strengthens the relationship between holders of its governance token and its broader Ethena protocol performance.

Wintermute also demanded greater transparency on past income distribution. The Ethena Foundation pledges to follow this principle of moving forward. Under community governance, revenue will stay under control to guarantee that sENA holders monitor the use of funds.

Moreover, Ethena has stated that it will not share any future income with development service providers or outside companies. The foundation also mentioned that accessing reserve fund will require governance permission, and they will use Ethena Protocol earnings for reasons other than sUSDe awards.

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