I have to admit I am skeptical about this. While I understand the temptation to diversify USDe’s reserve pool, I believe SOL would introduce more risk than reward. Of course, what I state in my comment may be entirely off.
Generally:
SOL’s price history:
SOL’s price history is marked by its association with FTX. It’s only been a year since it broke the $20-25 price mark. Can you be confident on SOL while it is arguably unproven in terms of price? USDe reserve should prioritize stability and reliability, which SOL has yet to consistently demonstrate.
KOL "meta”:
The current popularity of SOL on X should not be a deciding factor in such a critical financial decision. It is a trend driven by memecoins and can be attributed to a single app that gained traction with crypto-natives. It should not be confused with long-term ecosystem strength or stability. It is not an indicator of sustainable value or sound economics. The "coolness” factor, funded by KOLs, can fade as quickly as it rises, and Ethena should not make decisions based on ephemeral trends.
Prioritize institutional-grade products:
Ethena should focus more on offering a robust, institutional-grade product, so stability and risk management must be prioritized. This involves maintaining a conservative approach to the reserve assets. Decisions based on short-term crypto trends or paid influencer campaigns will not resonate with large financial institutions.
About the proposal:
Scaling and risk:
The short history of SOL perpetual futures and the lack of historical funding rate data make this move risky, even with a “reasonable initial target” of $100-200 million. While the proposal highlights favorable funding rates for SOL in 2024, it’s essential to consider the longer-term picture.
Revenue Potential:
The potential increase in protocol revenue should be weighed against the increased risk profile. Higher short-term returns often come with higher risks, which may not be appropriate for a stablecoin’s reserve.