Add USDe (Ethena USD) Token to Moonwell Markets on Base and Optimism

Proposals
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1

I’m excited to propose adding USDe (Ethena USD), the stablecoin from Ethena Protocol, to Moonwell’s core lending markets on Base and Optimism. This move will enhance market utility, encourage ecosystem growth, and provide users with a decentralized, stable asset that aligns with our protocol’s mission.

General Information

Token: USDe (Ethena USD)

Description: USDe is the stablecoin of the Ethena Protocol, designed to maintain a soft peg to the U.S. dollar. It integrates seamlessly within the DeFi ecosystem, combining stability, flexibility, and decentralization. Key features include:

  • Simple USDe Conversions: The USDe/USD converter allows easy and unrestricted 1:1 conversions between USD and USDe, ensuring fluid liquidity movement.
  • Participation in Ethena Savings Rate: USDe holders can earn rewards through the Ethena Savings Rate, offering a decentralized, non-custodial savings option without losing control of their funds.

Benefits to the Moonwell Community

  • Enhanced Stablecoin Liquidity: Adding USDe will expand our stablecoin offerings, creating more lending and borrowing opportunities. This addition will make Moonwell the largest source of multiple stablecoins in the market.
  • Increased Protocol Engagement: By integrating USDe, we can attract users from the Ethena Protocol ecosystem, including those looking to leverage the Ethena Savings Rate for stable returns.
  • Decentralization Alignment: As a new version of traditional stablecoins, USDe represents a permissionless, non-custodial alternative that aligns with decentralized finance principles.
  • Reduced Systemic Risk: Backed by surplus collateral and supporting secure 1:1 conversions, USDe offers a stable, reliable asset that reduces risks associated with over-leveraged or under-collateralized stablecoins.
  • Effortless Integration: Adding USDe to Moonwell doesn’t require new code development. All necessary functionalities and mechanisms are already in place within our current infrastructure, making the addition of USDe smooth and efficient.

Resources and Socials

Market Risk Assessment

Market Metrics:

  • Market Cap: $6B (across all networks)

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  • Vol/Mkt Cap (24h): 1.1%

  • Maximum Supply: Unlimited USDe

  • 24 Hour Trading Volume: $64M

Liquidity on DEX:

  • Curve (Ethereum): $20,000,000

Liquidity on CEX:

  • Bybit(Ethereum): $500,000,000

Decentralization

Top 10 Holders:
Rank,Address,Address_Nametag,Quantity,Percentage,Value

  • “1”,“0x9d39a5de30e57443bff2a8307a4256c8797a3497”,“Ethena: sUSDe Token”,“4,106,125,888.1873214736467282”,“67.8734%”,“$4,103,974,278.22”
  • “2”,“0x4db99b79361f98865230f5702de024c69f629fec”,“Pendle: SY-USDe Token 5”,“576,052,158.303144147702929284”,“9.5220%”,“$575,750,306.97”
  • “3”,“0xa7a93fd0a276fc1c0197a5b5623ed117786eed06”,“Bybit: Hot Wallet 2”,“450,000,008”,“7.4384%”,“$449,764,208.00”
  • “4”,“0x7fc7c91d556b400afa565013e3f32055a0713425”,“”,“283,319,876.187028256143271507”,“4.6832%”,“$283,171,416.57”
  • “5”,“0x5d3a1ff2b6bab83b63cd9ad0787074081a52ef34”,“”,“151,574,251.256268”,“2.5055%”,“$151,494,826.35”
  • “6”,“0x8707f238936c12c309bfc2b9959c35828acfc512”,“Ethena: Ethena LP Staking”,“121,374,173.019902022349592483”,“2.0063%”,“$121,310,572.95”
  • “7”,“0xf89d7b9c864f589bbf53a82105107622b35eaa40”,“Bybit: Hot Wallet”,“58,197,992.591450662480729569”,“0.9620%”,“$58,167,496.84”
  • “8”,“0xbbbbbbbbbb9cc5e90e3b3af64bdaf62c37eeffcb”,“Morpho: Morpho Blue”,“48,725,462.391308045026712703”,“0.8054%”,“$48,699,930.25”
  • “9”,“0x88a1493366d48225fc3cefbdae9ebb23e323ade3”,“”,“35,200,050”,“0.5818%”,“$35,181,605.17”
  • “10”,“0x5dc1bf6f1e983c0b21efb003c105133736fa0743”,“”,“33,182,004.279886027188299207”,“0.5485%”,“$33,164,616.91”

Token Contract:

same code on two networks!
Base: 0x5d3a1Ff2b6BAb83b63cd9AD0787074081a52ef34
Optimism: 0x5d3a1Ff2b6BAb83b63cd9AD0787074081a52ef34

  • Blacklist Functionality: No.
  • Is the token pausable? No
  • Token Standard: LayeZero Multichain ERC-20 USDe Stablecoin
  • Minter on Base and OP: LayerZeroEndpointV2
    USDe.sol is the contract of ethena stablecoin. It extends ERC20Burnable, ERC20Permit and Ownable2Step from Open Zepplin. There’s a single variable, the minter address that can be modified by the OWNER. Outside of Ownable2Step contract owner only has one custom function, the ability to set the minter variable to any address.
    The minter address is the only address that has the ability to mint USDe. This minter address has one of the most powerful non-owner permissions, the ability to create an unlimited amount of USDe. It will always be pointed to the EthenaMinting.sol contract.
  • Owner of Ethena’s smart contracts: Ethena utilises a gnosis safe multisig to hold ownership of its smart contracts. All multisig keys are cold wallets. We will require 7/10 or more confirmations before transactions are approved. This multisig is purely for the purpose of owning the smart contracts, and will not hold funds or do other on chain actions.
  • Ethena right: Ethena can change Minter role!

Smart Contract Risks

Codebase and Onchain Activity:

summary of the Ethena Protocol documentation:

Key Features

  • USDe (Synthetic Dollar): USDe maintains a soft peg to the U.S. dollar through delta-hedging mechanisms. It’s designed to be censorship-resistant and fully-backed by crypto assets.
  • sUSDe (Internet Bond): sUSDe is a reward-accruing asset derived from staked asset returns and the funding/basis spread available in perpetual and futures markets.
  • Delta Hedging: USDe’s peg stability is achieved by executing automated delta-neutral hedges with respect to the underlying backing assets.
  • Permissionless Minting: Users can acquire USDe in external liquidity pools, and approved parties can mint and redeem USDe on-demand.

Benefits

  • Decentralization: USDe is non-custodial and permissionless, aligning with decentralized finance principles.
  • Stability: The delta-hedging mechanism helps maintain a relatively stable value.
  • Revenue Generation: Ethena Protocol generates revenue from staked ETH assets and the funding/basis spread from delta-hedging derivatives positions.

Risks

  • Market Conditions: The stability of USDe can be affected by market conditions and the performance of the backing assets.
  • Counterparty Risk: While minimized, there is still some counterparty risk associated with derivatives exchanges.

Oracle Assessment

Oracle Price Feed Addresses:

  • USDe-USD, Base Feed Address: 0x790181e93e9F4Eedb5b864860C12e4d2CffFe73B
  • USDe-USD, Optimism Feed Address: 0xEEDF0B095B5dfe75F3881Cb26c19DA209A27463a
  • Relevant Documentation: Base Optimism
  • Tier: Low Market Risk

Proposal Author Information

Name: AsgardAdmin
Github: AzgardMultiSig (AzgardAdmin) · GitHub
Delegate Address: 0xC4c1e942c6B97EE736d15E6edE71dBc323200c3d
Relationship with Token: I have no personal or professional relationship with the USDe token.

Conclusion

Adding USDe as a core lending market will boost stablecoin utility and drive liquidity growth on Moonwell. By supporting USDe, we can offer users new financial opportunities while promoting stability and innovation within our protocol.

I’m opening this proposal to the community for review, discussion, and feedback to ensure its success and alignment with our vision for a secure and decentralized onchain financial future.

Invitation to Gauntlet

We invite @Gauntlet to review USDe as collateral and provide a risk recommendation to ensure a thorough assessment and alignment with our protocol’s risk management framework.

3 Likes
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I would be in favor of a review by Gauntlet

2 Likes
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Hey @multisigGov, welcome to Moonwell Governance. I see that you just submitted a Snapshot proposal for USDe listing, but do you not think it may be premature with the lack of liquidity for the asset on Base / OP Mainnet ($80k and $15k respectively)?

Also, I see that quite a lot of information that is requested in the Moonwell Asset Listing Framework is missing above.

2 Likes
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Hi @majin,
Thanks for the warm welcome to Moonwell Governance and for your prompt feedback. I totally understand your concerns about the liquidity of USDe on Base and OP Mainnet.
Regarding liquidity, I agree that it’s currently on the lower side. However, I believe listing USDe on Moonwell can actually help boost adoption and liquidity. By adding USDe to Moonwell’s markets, we can attract more users from the Ethena Protocol ecosystem and increase demand for the asset. Plus, the Ethena team is working hard on initiatives to boost liquidity on both networks, and I’m confident we’ll see positive results soon.
As for the missing information in the Moonwell Asset Listing Framework, it’s important to highlight that Ethena is a well-known and reputable protocol in the DeFi space. Their documentation and resources are comprehensive and reliable, addressing many concerns about the token’s legitimacy and technical details.
We will wait for @Gauntlet review and risk recommendation before considering this proposal for on-chain implementation.

5

Edited to include missing information that is requested in the Moonwell Asset Listing Framework

6

Hi @multisigGov, I voted in accordance with approving this at the temperature check level. I agree with Majin in that this proposal needs elaboration and perhaps the token itself needs additional growth on Base prior to moving forward. I don’t see any elaboration here on whether the token includes any pausing capabilities and what capabilities Ethena governance has for the token as well. Furthermore, while the token has sufficient liquidity on Ethereum, the liquidity on Base is considerably lower, and this can be fine in certain cases (if there is an upcoming catalyst or ecosystem project that will catapult the token’s liquidity). Candidly, I would like some disclosure of this somehow either among contributors or in the forums so we can trust the growth of the liquidity in the future.

Also, for the top 10 holders, it would help if you could characterize who these wallets are more properly, you have some of these labeled, which is a great starting point already. Perhaps adding clarity on what wallets are a risk and which are not.

Regardless, I agree with others that the framework listing should be definitively outlined, and while Ethena is famous, this doesn’t mean that parts of the process should be ignored.

2 Likes
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Hi @0xmims,
Thanks a ton for your detailed explanation and feedback. I really appreciate it. Given your track record with so many successful proposals, I’d be super grateful if you could share your expertise and help me fine-tune this one.
As for Ethena, it currently doesn’t have any utility on Base and Optimism. We all know that utility can significantly boost liquidity. What could be better than being the first to provide such utility and attract people to increase our TVL?
At this time, Compound on Mantle and Aave on Ethereum are using USDe and After our successful Snapshot about adding USDe, we have already seen an increase in token liquidity on Base , which is a positive sign!
I’m really excited to incorporate your suggestions and make this proposal as strong as possible. I’ve already edited the proposal to include the contents you mentioned.