Ethereal Exchange Seeks Integration with Ethena: What’s the Plan?

• Ethereal Exchange proposes integrating with Ethena to boost USDe adoption, offering a 15% token allocation to ENA holders if approved.
• Ethereal aims to match centralized exchange performance while ensuring self-custody, with 1 million transactions per second capacity.

A recent proposal in the Ethena governance community has attracted interest, as Ethereal Exchange wants approval to build a new decentralized exchange (DEX) based on the USDe stablecoin, with the goal of integrating it into the Ethena hedging engine and liquidity management system.

The proposal contains a special offer for existing ENA token holders, offering a 15% allocation of any new Ethereal governance tokens if the integration is accepted. This campaign intends to align the Ethena and Ethereal communities, resulting in reciprocal advantages and increased acceptance of USDe within the decentralized finance (DeFi) ecosystem.

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

Ethereal Aims to Deliver High-Speed DEX Performance with USDe Integration 

Ethereal is designed to act as a spot and perpetual futures DEX, leveraging the Ethena Network’s features and utilizing USDe as its primary stablecoin. With the connection, Ethereal wants to create a completely on-chain platform for managing spot and derivative positions that support USDe.

According to the proposal, Ethereal’s architecture is meant to handle up to 1 million operations per second with a latency of less than 20 ms, putting it on pace with some of the fastest centralized exchanges available.

This high degree of performance is designed to compete with centralized exchanges (CEXs) while retaining features like cross-margin, liquidity automation, and portfolio margin, all while assuring self-custody and flexibility.

The Ethena community has voiced a mix of enthusiasm and skepticism regarding the plan. On the one side, the integration of Ethereal might greatly increase the growth and demand for USDe within the Ethena ecosystem, potentially opening up new trading opportunities and passive revenue streams.

Community Concerns Rise Over Transparency and Potential Integration Benefits 

On the other hand, several community members have expressed worries about the Ethereal team’s lack of openness, advocating a fully named team and their backgrounds before committing.

Given the project’s minimal social media presence and lack of a well-established reputation in the DeFi industry, the request came from a newly created account, which increased the level of mistrust.

If the integration is permitted, Ethereal might provide significant benefits to the Ethena ecosystem, including decentralization and improved transparency. This would allow USDe to run independently of any central authority, giving users a more open understanding of how the stablecoin is sustained and backed.

The DEX might become a native platform within the Ethena chain, using abundant liquidity and setting a precedent for additional USDe-based apps. This relationship has the potential to transform Ethena from an asset issuer to a platform for broader financial innovation.

The Ethena Labs community is likely to vote on the proposal shortly. Ethereal’s request involves Ethena community support to serve as a platform for performing hedging transactions, subject to a suitable technical examination by Ethena’s staff.

Furthermore, Ethereal intends to leverage the Ethena Network’s technical help for deployment and integration with the Ethena hedging engine.

Despite some reservations, the Ethereal Exchange project offers the prospect of increasing liquidity and adoption for USDe, with intentions to become a key component of the Ethena network.

On the other hand, CNF previously reported that Ethena Labs has launched sENA. sENA allows users to maintain liquidity with staked ENA, opening up opportunities across a variety of DeFi apps and platforms.

Meanwhile, as of writing, its native token, ENA, is trading around $0.3972 after gaining 12.02% over the last 24 hours. This impressive performance has brought ENA to the top of today’s top gainers list.