Summary
LlamaRisk has conducted a legal review of the Master Loan Agreement governing Ethena’s reserve-backing asset deployment to Payward Trading Limited (an institutional entity within the Payward / Kraken group).
Scope of Review
LlamaRisk assessed counterparty structure and regulatory standing, asset protection mechanisms (collateral, security interests, enforceability), operational provisions (loan origination, termination mechanics, reporting), default and remedies architecture, and protocol-specific considerations relevant to digital asset lending. The specific contractual terms, commercial thresholds, and pricing provisions are confidential and are not disclosed in this public summary.
Findings
The Payward MLA establishes a bilateral lending framework with Payward Trading Limited, a British Virgin Islands entity within the Payward corporate group (trading as Kraken). A notable structural feature is the tri-party custody arrangement: the collateral is held by a third-party qualified custodian (Anchorage) under an Account Control Agreement and a Collateral Management Agreement, placing collateral control outside the Borrower group and separating it from Borrower solvency, while preserving Ethena’s secured claim over the collateral.
The Payward MLA provides a sound and appropriately protective framework for the deployment of Ethena’s reserve-backing assets. No recommendations on amendments or fixes have been issued by our side.
Conclusion
LlamaRisk supports the Risk Committee’s approval of the Payward Master Loan Agreement for the deployment of Ethena’s reserve-backing assets.