The Ethereum lending protocol Aave proposed on January 3rd to peg the stablecoin USDe of the Ethena stablecoin protocol to USDT and maintain price consistency to reduce market risk. However, many Aave community users hold opposing views and question whether it truly resolves the fundamental issues of stablecoins.

USDe is pegged to USDT to reduce market volatility

Currently, Aave uses Chainlink oracles to obtain price data for USDe relative to the US dollar (USD), which is used to estimate the value of USDe. The proposal states that Aave's oracles will set the price of USDe to be the same as that of USDT, thereby ensuring that the value of USDe remains consistent with USDT, and providing a stable reference price source for Ethena's yield token sUSDe through USDT's price data.

The goal is to reduce the impact on the Aave ecosystem caused by secondary market fluctuations of USDe, while also preventing the risk of loan liquidation due to a drop in the price of USDe. The proposal adds that if the price of USDe drops by 5%, loans totaling over 300 million dollars, secured by USDe, may be subject to forced liquidation.

Reasons for USDe pegging to USDT

Ethena's USDe is a synthetic stablecoin supported by on-chain assets and derivatives, using investors' collateral (ETH) to hedge price risks and utilizing perpetual contracts for shorting to maintain its peg to the dollar. Through Delta hedging, it ensures that any gains or losses of any one asset are offset against each other, unlike USDT which relies on dollar reserves. Currently, USDe's market capitalization ranks just below USDT and USDC, reaching 5.83 billion dollars.

USDe currently has a market capitalization of 5.83 billion dollars.

Aave users can participate in staking the stablecoin USDe to receive the staking token sUSDe and utilize Aave's lending features to earn yield. However, since USDe is not a completely pure stablecoin, its market price may fluctuate, making it seen as a solution to reduce liquidation risk by pegging it to USDT.

(Stablecoin market capitalization surpasses 200 billion dollars, with USDe rising to third place)

Community reactions are mixed, questioning whether a rigid peg can solve the fundamental issue

This news has sparked a strong backlash from many users in the Aave community, with some questioning what problems might arise from such a rigid peg of USDe's price to USDT, and others asking, 'What would be the worst-case scenario in an extreme situation?'

Users are questioning the risks of pegging USDe to USDT.

Some users bluntly criticized that if Aave wants to rigidly stipulate that the price of USDe must be the same as USDT, it would be better to just set the price of USDe to 1 dollar directly. Why peg it to USDT? 'The quality of this proposal is really disappointing; it does not delve into the potential conflicts of interest at all,' users expressed. Currently, the proposal is still in the discussion stage and has not yet started voting.

Some users bluntly criticized the proposal for its poor quality, claiming it did not thoroughly explore potential conflicts of interest.

(Ethena launches a new stablecoin UStb, backed by BlackRock BUIDL as asset reserves, which can reduce USDe's risk)

This article discusses Aave's proposal to peg the Ethena USDe stablecoin to USDT! The community questions: there is no consideration of conflicts of interest. First appeared in Chain News ABMedia.