Wintermute Governance: Proposal for ENA Fee Switch

General
1

Summary

To date, there has been limited guidance publicly on the structural framework of the Ethena protocol, specifically with regards to the flow of protocol revenue.

There has also been no guidance on how ENA could potentially fit within the overall protocol revenue split and whether there is any plan in place to eventually allocate a portion of protocol revenue to ENA in some fashion.

This post aims to clarify the aforementioned questions via:

  1. A proposal to the Risk Committee to approve the potential for a portion of protocol revenue to accrue to sENA; and

  2. A proposal to the Risk Committee to outline a framework to determine when it might be appropriate for the protocol to consider allocating a portion of protocol revenue to sENA with consideration for the maturity of the protocol;

  3. A request to the Ethena Foundation to clarify the present flow of protocol revenue to help inform the above decisions.

Proposal: Protocol Revenue Split with sENA

ENA

Alignment With The Protocol - Enabling A Fee Switch

The Ethena Protocol has and continues to generate substantial amounts of real revenue, indicating a clear level of PMF for USDe. Unfortunately, sENA does not directly benefit from this revenue, resulting in an explicit disconnect between sENA holders and the growth of the protocol. It’s time to acknowledge this and look towards establishing clear alignment between ENA holders and the underlying fundamentals of the protocol.

Therefore, we propose to the Risk Committee a request to approve the potential for an allocation of protocol revenue to sENA in the future

Implementation

The precise implementation could be decided at a later date. But it should consider the optimal form for such an allocation to take regarding:

  1. The % of protocol revenue that is redirected in some form to sENA
  2. The mechanism as to how protocol revenue is distributed to sENA
  3. Dynamics of a growing USDe supply
  4. Competitiveness of sUSDe yield

For example, it may be the case that direct allocations are suboptimal to implement in practice for a variety of reasons related to the maturity of the protocol. At the very least, we request that the possibility of directing revenue to sENA is enabled.

Conditions to Turning It On

Acknowledging that it may be too early in Ethena’s life cycle to allocate a portion of protocol revenue to sENA, we ask the Risk Committee to provide the Ethena community with a broad set of parameters/milestones for Ethena to reach before an allocation of protocol revenue to directly benefit sENA may be considered. These parameters may include, at the discretion of the Risk Committee, factors such as:

  • USDe circulating supply
  • Gross or average levels of protocol revenue
  • Spread of sUSDe APY relative to “market” rates
  • Adoption of USDe on important distribution venues such as centralized exchanges

As this would represent a significant, foundational change to tokenomics, any ultimate decision to implement the program should be put to a broader ENA/sENA vote.

Current Protocol Revenue

The industry has observed examples of “dual class” structures where equity holders may gain benefits that do not align with the interests of the related protocol or governance token holders. To promote a sustainable future for the industry and ecosystem, transparency is essential. Given the current lack of public information, we seek clarification on the extent to which this may have occurred with respect to the Ethena protocol.

We kindly request that the Foundation provide clarity on whether 100% of Ethena protocol revenue has been allocated or retained solely for the benefit of the protocol so far. Additionally, we ask for confirmation that future revenues will continue to be managed within the Ethena protocol, ensuring they benefit the protocol and remain governed by ENA/sENA.

Next Steps

We would make the following proposals to the Risk Committee:

  • Approve the potential for instituting programs that would allocate a portion of Ethena protocol revenue for sENA-related programs; and
  • Provide parameters for the Ethena protocol to reach before such a program could be proposed to ENA/sENA for a vote.

We’d also request that the Ethena Foundation:

  • Publicly clarify the historical and future split of protocol revenue, specifically with regards to the protocol and any equity holders of any external entity (for example, Ethena Labs).
26 Likes
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The proposal makes total sense. Great usability for ENA

1 Like
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That would make sense ! With trump winning defi will be among the front runners and ethena already grab the most important aspect of defi i.e stable coin
Sharing revenue would install confidence among retailers and get us out of image that previous player harmed ! Future is bright . Let’s do it :handshake:

2 Likes
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As ENA/sENA holder, totally agree the proposal. Protocal revenue need to be allocated to its share holders(ENA) with transparancy.

5

Great.
Bigger USDe to bigger ENA to bigger USDe.

6

cp0x fully supports this proposal, which is aimed at ensuring transparency in the terms of the current state and further development of the protocol and the ENA token.

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Totally practical and will be make people stake more, hence the value stability and appreciation
Bravo

8

If only the project spent part of its income on burning the ENA token (because there are too many tokens) it should be burned as BNB

1 Like
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Well Proposed. I think this is something worth looking into. Agreed.

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me brothas, gud to see ya kik this off me brothas, but how about we build a financial buffer first to provide stability, eeeespecially in a market as volatile as DeFi me brothas. me thinks a surplus would reinforce Ethena’s resilience. for dee parameters for revenue sharing milestones, let’s get to 5BILLION USDE first me brothas. difficult to say wat the revenue levels should be since we no have visibility. but me want to thank u me brothas for this proposal. one love.

1 Like
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The Ethena Foundation acknowledges there has been a lack of clear guidance publicly on the structural framework of the Ethena protocol, specifically with regards to the flow of protocol revenue. To date, there has also been no guidance on how ENA tokenholders fit within the overall protocol revenue split.

This response clarifies that from this date, no revenue will be directed to Ethena Labs (or any other “Labs” service provider / development company) in whole or in part.

Protocol revenue will only flow to, and for, the benefit of the protocol and not to any equity holders of any entity external to the Ethena Foundation.

To be explicit, the Ethena Foundation has and will continue to enforce the following as in furtherance of its objects, which are to support the Ethena protocol and support the protocol’s infrastructure:

  1. A strict requirement that 100% of future revenue earned by the Ethena protocol accrues to the benefit of the protocol and will not be shared with any “Labs” or development services provider entity, including but not limited to Ethena Labs.

  2. The use of Ethena protocol revenue for specific purposes outside of sUSDe rewards and the Reserve Fund would be determined via governance and is open to the community to contribute ideas towards in terms of precise structuring.

The Ethena Foundation acknowledges the potential benefits to the overall protocol and ecosystem associated with the proposal. We will now work with the Risk Committee to arrive at a set of parameters the protocol needs to reach before allocations of protocol revenue to sENA-related programs should be considered.

6 Likes
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I believe this is the true PMF for crypto and the future of Defi. Governance should be about being a shareholder of the protocol and getting full acess to its growth and revenue. I am a big fan and holder of $Ena. Keep building.

1 Like
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We find this proposal to be well-designed in addressing the critical need for transparency and alignment between protocol revenue and sENA holders. The initiative raises important questions about the current revenue structure while thoughtfully approaching potential changes through a measured, milestone-based framework.

The proposal effectively identifies the existing misalignment between protocol success and sENA value accrual. The focus on establishing clear parameters before implementing any revenue sharing is a pragmatic approach that prioritizes the protocol’s stability and maturity.

The requested clarifications regarding historical and future revenue flows, particularly concerning any potential “dual class” structures between equity and token holders, are especially pertinent given recent industry experiences. This emphasis on transparency should help establish greater trust within the ecosystem.

One aspects of the proposal that could benefit from additional specification would be a more detailed exploration of the underlying mechanism for revenue distribution to sENA.

We particularly appreciate the proposal’s acknowledgment that immediate revenue sharing may be premature, coupled with the request to establish clear conditions for future implementation. This approach helps ensure that any changes to revenue distribution will occur at an appropriate stage of protocol maturity.

Overall, we support this initiative as it represents a thoughtful step toward improving alignment between protocol success and token holder value while maintaining appropriate focus on sustainable growth and transparency.

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We (Tally) are happy to see this proposal and supportive of an ENA fee switch. We’re actively working on fee sharing and governance token staking via the Tally Protocol in the Arbitrum DAO, Uniswap DAO, Rari DAO, and others.

It’s our view that staking rewards should be paid to governance token holders in exchange for helping to secure the protocol through active governance participation, not just for passively holding sENA. We suggest that the risk committee consider making onchain governance a parameter that the protocol needs to reach before enabling a fee switch. We also suggest that the risk committee consider tying staking rewards to activities that help secure and grow the protocol over the long-term.

We would be excited to contribute to this initiative in any capacity that we can. Cheers.

1 Like
15

I strongly support this proposal. This move will strengthen Ethena’s position in the financial world and can be done without regulatory hiccups given the crypto-friendly Trump administration.

1 Like
16

Staking rewards paid to governance token holders for helping to secure the protocol through governance makes complete sense.

I would add that an option to delegate the governance token be added to help those of us who aren’t well versed in some of the complex issues that will be getting voted on.

17

Let’s go Ethena…i am in from season 1…2 and 3 …Great usability for ENA, i believe in this project and my research, i think this will add more value to it, and more…

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Protocol revenue is already directed towards sUSDe. Having transparency on whether it’s 100% of the revenues or less would be nice to have.
Redistributing protocol revenue to staked USDe is the only reason people would use Ethena stablecoin over other stablecoins.
sENA is already benefitting from the redistribution of forfeited ENA and will do as long as airdrop seasons are running (+12 months given the linearity of the distribution).
Therefore, redirecting protocol revenues towards sENA at the expense of sUSDe seem to be detrimental to the protocol.

1 Like
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The proposal makes total sense

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me fully agree with ya, me brotha! It’s real important fi get people involved in the onchain governance, ya know. Dis way, we can start havin’ all di ETHENA family learn to take part, get dem used to it. Once we see like 30%++ of di sENA token holders votin’ steady, den we can turn on staking rewards fi dem who been holdin’ down governance and stayin’ active, ya feel mi? sin. one love.