Community of Decentralized finance (DeFi) protocol for the USDe stablecoin, Eethena put forth a proposal titled “Introducing Ethereal: Request to Ethena Governance on Integration,” seeking approval for the launch of a new spot and perpetual exchange that will utilize USDe, integrating it into the Ethena hedging engine and liquidity.

The proposal introduces Ethereal, a decentralized exchange (DEX) designed for both spot and perpetual futures trading, built on the forthcoming Ethena Network 55 using USDe. The community is seeking support for integrating with Ethereal as a platform for executing hedging transactions, contingent upon a thorough technical due diligence process conducted by the Ethena Foundation and Risk Committee. Furthermore, it is requesting technical assistance for deploying Ethereal onto the Ethena Network to facilitate integration with Ethena’s hedging engine.

Ethereal V1, with a testnet anticiated in Q4, will operate as a Layer 3 Ethereum Virtual Machine (EVM) appchain that settles transactions on the Ethena Network. This architecture is intended to leverage the advantages of isolated blockspace while maximizing synergies within the Ethena ecosystem. Alongside a comprehensive on-chain exchange engine, Ethereal will also facilitate the deployment of additional applications that utilize USDe, enabling enhanced features such as borrowing and lending markets to further enrich the core DEX’s functionality.

In addition to increasing the utility and demand for USDe, the Ethena community stands to gain from a proposed 15% allocation of any future Ethereal governance token if the proposal is approved. The community suggests that this allocation be distributed to holders of circulating ENA tokens.

The proposal aims to highlight the synergies between Ethereal and Ethena, while also seeking the Ethena community’s backing for the integration of Ethereal in the upcoming months.

A new proposal was made on Ethena governance a few hours ago

Ethereal Exchange is requesting the community approval to launch a new spot and perpetual exchange built on USDe and integrated into the Ethena hedging engine and liquidity

Their proposal includes a 15% commitment of…

— Ethena Labs (@ethena_labs) September 30, 2024

What Is USDe And How Does It Function?

Ethena Labs offers a cryptocurrency-based alternative to conventional financial systems. The USDe stablecoin provides a scalable solution by utilizing delta-hedging techniques with collateral from Ethereum and Bitcoin.

It is fully backed and can be easily integrated into both centralized and decentralized finance environments. Its stability in maintaining its peg is achieved through delta-hedging derivatives against collateral held by the protocol, ensuring a relatively stable value in relation to both spot cryptocurrency assets and futures positions.

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