Aave Proposes Hardcoding USDe to USDT, Faces Resistance from Crypto Community
- Aave proposal seeks to hardcode USDe into USDT.
- Community expresses concerns about liquidation risks.
- Ethena plans to integrate sUSDe with Telegram in 2025.
Aave's latest proposal, a by The idea, which is one of the largest decentralized finance (DeFi) platforms, has sparked intense debate in the crypto community. The idea put forward by Chaos Labs and LlamaRisk, members of Ethena’s risk committee, seeks to link the price of USDe, Ethena’s synthetic stablecoin, to Tether’s USDT. The goal is to protect users against price fluctuations in the secondary market.
According to the proposal, aligning the sUSDe oracle with the USDT price would ensure seamless integration and reduce liquidation risks. Currently, Aave uses Chainlink’s USDe/USD price feed to price sUSDe, which could expose users to price fluctuations in the secondary market. The authors argue that decoupling the stablecoin from these short-term fluctuations is essential to minimize liquidation risks.
The proposal details that a 5% drop in the price of USDe could put over $300 million in USDe-backed loans on Aave at risk. Such an event could trigger the selling of collateral to cover outstanding debts, bringing instability to the protocol.
Despite the justifications, the community has expressed concerns. Users like Hazbobo have questioned the risks of pegging USDe to USDT, pointing out that the former was not originally conceived as a stablecoin. Another member, ElliottNess, has criticized the proposal, claiming that it fails to address fundamental risks. “If the idea is hardcoding, why not peg it directly to the dollar? That would avoid price bias altogether.”
Meanwhile, Aave continues to expand, seeing significant growth in 2024 with integrations into networks such as BNB Chain, ZKsync, and Scroll. The platform also projects new collaborations for 2025, including Sonic, Mantle, and Aptos.
Ethena celebrated a 17% increase in its token after revealing its 2025 roadmap. Among the plans are the integration with Telegram, which has 900 million users, and the launch of iUSDe, a wrapped version of sUSDe with a 10% yield.
The hardcoding proposal is still under discussion, with no voting date scheduled, but it already signals significant impacts on the crypto ecosystem.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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