The Aave community recently initiated a new ARFC proposal, suggesting to hardcode the price of USDe for Ethena to match the USDT in Aave's price feeds.

This proposal was co-authored by Chaos Labs and LlamaRisk, submitted on January 3, and aims to protect Aave users from secondary market fluctuations. Notably, LlamaRisk is a member of the Ethena Risk Committee. The proposal states: "By directly linking the value of USDe to USDT, we will align the sUSDe oracle with USDT pricing, ensuring seamless integration and avoiding disruptions caused by transient fluctuations in the price of USDe."

Aave currently uses Chainlink's USDe/USD price information to assess staked USDe (sUSDe), which is the staked version of USDe.

Previous news,

According to the proposal, a 5% drop in the price of USDe or loans backed by USDe worth over $300 million on Aave could face liquidation risk, potentially triggering a collateral sell-off to repay outstanding debts. The proposal states: "To mitigate the risks associated with USDe depegging events, we recommend hardcoding the price of USDe to USDT."

The proposal has raised skepticism among Aave users, who question whether the approach addresses the fundamental risks. "Given that USDe is not truly intended to be a stablecoin, hardcoding the price of USDe to USDT sounds a bit risky," user Hazbobo pointed out, "What are the extreme scenario risks involved? What is the worst-case scenario?"

Another community member, ElliotNess, criticized the proposal for failing to address potential risk factors: "This is a disappointing low-quality ARFC from two service providers, lacking a deep exploration of any potential conflicts… Frankly, every non-hardcoded asset listed on the Aave protocol could be said to be so."

ElliotNess questioned the rationale behind pegging USDe to USDT and suggested that if Aave plans to hardcode the price of USDe, it might as well peg it directly to $1.00 to completely avoid secondary market price deviations.

The proposal is in the early discussion stage and has not yet opened for formal voting. (Cointelegraph)

Ethena Labs founder Guy Young posted a photo discussing with Aave founder Stani on X, stating: "Aavethena is a great proof of concept, Arcthena will scale DeFi by 10 times."

In response, a user below inquired about the timeline, to which Guy replied 1-3 months. #ETH