Ethena Stakes 180M ENA Tokens, Faces Scrutiny Over Rewards

The revelation from crypto investigator Nomad on October 27 has sent ripples through the decentralized finance community. According to Nomad’s analysis, Ethena Labs staked a massive 180 million ENA tokens specifically for its Season 3 crypto-farming event. This represents a staggering 25% of the total staked ENA (SENA) tokens in circulation, giving the protocol itself an outsized influence over the reward distribution mechanism.

The core concern centers on how this substantial stake could potentially diminish rewards for other participants in the ecosystem. When a single entity controls such a significant portion of staked tokens, it naturally raises questions about the equitable distribution of farming rewards. Nomad’s investigation further alleged that Ethena Labs is using these holdings to generate Sats through various activities on its own platform, creating a potential conflict of interest that has drawn criticism from market observers.

Amid the growing uncertainty surrounding Ethena’s staking activities, BitMEX co-founder Arthur Hayes revealed his own strategic approach to the situation. In an email to CoinDesk, Hayes stated that his Maelstrom fund maintains 5% of its portfolio in staked USDe (Ethena USD), which is currently earning approximately 13% yield. This cautious allocation suggests a measured approach to the Ethena ecosystem despite the ongoing concerns.

Hayes noted that Maelstrom, which is overseen by his family office, is simultaneously maintaining substantial long positions in Bitcoin, Ether, and other cryptocurrencies. The fund’s broader strategy appears designed to shield against market volatility in the lead-up to the U.S. presidential election, with results anticipated on November 8. This dual approach—limited exposure to Ethena’s products while maintaining traditional crypto longs—reflects a careful balancing act in the current market environment.

Maelstrom’s investment mandate focuses on companies expected to play crucial roles in the next wave of decentralized finance, making its positioning in Ethena particularly noteworthy. The 5% allocation to staked USDe, while modest, indicates some level of confidence in Ethena’s core synthetic dollar product despite the staking controversy.

At the heart of this controversy lies Ethena’s USDe, which functions as a synthetic dollar built on the Ethereum blockchain. The protocol utilizes a sophisticated combination of collateralized stablecoins and a hedging strategy to maintain its peg to the U.S. dollar. This approach distinguishes USDe from traditional algorithmic stablecoins by incorporating real collateral while employing derivatives for price stability.

The staking mechanism for USDe allows users who stake the token or acquire staked USDe (sUSDe) to gain automatic access to protocol rewards. This system is central to Ethena’s value proposition, making the current staking controversy particularly damaging to the protocol’s credibility. The revelation that Ethena Labs itself controls such a large portion of staked ENA tokens threatens to undermine confidence in the platform’s reward distribution fairness.

The timing of these developments is particularly sensitive given the approaching U.S. presidential election and broader market uncertainty. As investors seek stable yields amid volatility, protocols like Ethena face increased scrutiny regarding their operational transparency and the equitable distribution of rewards among participants.