Wintermute proposes fee switch for Ethena’s sENA holders

Crypto market maker Wintermute posted a new governance proposal on Wednesday that aims to enable the fee switch for Ethena (ENA) holders. 

“The Ethena Protocol has and continues to generate substantial amounts of real revenue, indicating a clear level of [product-market fit] for USDe,” the proposal said. “Unfortunately, sENA does not directly benefit from this revenue, resulting in an explicit disconnect between sENA holders and the growth of the protocol.”

USDe is Ethena’s U.S. dollar-pegged stablecoin with over $2.8 billion in market capitalization, while sENA is the staked Ethena governance token. To solve this disconnect, Wintermute proposed a plan to Ethena’s risk committee that would allocate a portion of Ethena protocol’s revenue for sENA and related programs. 

However, the proposal did not present specific details such as the percentage of revenue allocation or the fee switch mechanism. Instead, Wintermute asked Ethena to consider the “optimal form” of the fee switch with respect to USDe’s growing supply and the competitiveness of staked USDe’s yield.

The proposal further asked Ethena’s risk committee to provide its community a set of parameters for the protocol to reach before the fee switch is activated, such as the circulating supply of USDe, gross or average levels of protocol revenue and adoption of USDe on important distribution venues. 

Wintermute called on the Ethena Foundation to transparently disclose the historical allocation of protocol revenue, ensuring it has solely benefited the protocol. Additionally, they requested confirmation that future revenue will continue to serve the protocol's interests and remain under the governance of ENA and sENA.

According to Token Terminal data, Ethena protocol holds a fully diluted market capitalization of $4.93 billion and an annualized revenue of nearly $150 million.