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

This proposal was co-authored by Chaos Labs and LlamaRisk and submitted on January 3, aiming to protect Aave users from secondary market volatility. 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 brief fluctuations in USDe's price."

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

Previously reported,

According to the proposal, a 5% drop in USDe's price or the risk of liquidation facing USDe-backed loans exceeding $300 million on Aave could trigger a fire sale of collateral to repay outstanding debts. The proposal notes: "To mitigate the risks associated with USDe de-pegging 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 genuinely intended to be a stablecoin, hardcoding the price of USDe to the USDT price sounds a bit risky," user Hazbobo pointed out. "What are the extreme scenario risks involved? What’s 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 in-depth exploration of any potential conflicts... Frankly, every non-hardcoded asset listed on the Aave protocol could be said to have that issue."

ElliotNess questioned the reasoning 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 currently in the early discussion stage and has not yet opened for formal voting. (Cointelegraph)

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

In response, users below inquired about the relevant timeline, to which Guy replied it would be within 1-3 months. #ETH