The well-known Ethereum-based platform Ethena Labs, which specializes in synthetic dollar assets, has publicly denied recent claims that it staked 180 million ENA tokens during its ongoing Season 3 farming event. According to allegations made by crypto investigator Nomad, Ethena’s group allegedly possessed about 25% of all ENA tokens staked, which purportedly skewed the distribution of rewards in their favor.
Six wallets associated with Ethena Labs actively staked these ENA tokens, earning incentives in the form of Sats, an Ethena ecosystem reward system, and more Ethereal (ETRL) tokens, according to Nomad. These wallets amassed over 20% of all Ethereal points allotted to the community, allegedly obtaining tokens from a Coinbase Prime Custody account.
Guy Young, the founder of Ethena Labs, gave clear explanations in response to these allegations. Young underlined that the tokens in question are a component of the foundation’s reserves, which are eligible for participation in accordance with Ethena’s protocol and adhere to the specified vesting timeline. He assured that neither the team nor the investors used their locked tokens for reward generation or staking.
“Nomad has since retracted the initial claims after we clarified the token unlock and distribution process,” Young said. He further reaffirmed that these activities only stake eligible unlocked tokens, not any locked tokens owned by the team or investors.
The six wallets being examined
Nomad asserts that a series of transactions moved the 180 million ENA tokens to six distinct wallets connected to Ethena Labs. The Sats farming leaderboard, which awards users according to their actions on Ethena’s platform, soon featured these wallets. Reports that the aforementioned wallets were also gathering ETRL and Sats rewards raised concerns over the openness of the reward distribution system
Nomad noted that this significant holding in ENA could potentially diminish the incentives of normal users, particularly those holding Ethena’s USDe tokens. The company’s handling of its $2.6 billion user fund and the equitable distribution of all profits to its consumers also raised concerns about Ethena’s revenue transparency.
The foundation has made sure that none of the tokens staked in the present event are eligible for any further prizes or airdrops, and Ethena responded by restating that the tokens strictly follow the eligibility requirements for staking activities.
Concerns Regarding Ethena’s Farming Events in the Past
Concerns about Ethena’s staking incidents have already surfaced. Some users claimed to have suffered losses during previous farming seasons, raising questions regarding Ethena’s policies and user safety. Nomad emphasized the importance of trust and openness, stressing that the fair and transparent management of assets and distribution of incentives by centralized finance protocols is what determines community confidence.
Ethena’s Continued Progress
Ethena has persisted in growing its product line in spite of the controversy. Users can now utilize its USDe token as collateral for over-the-counter cryptocurrency trading thanks to a recent partnership with algorithmic trading company Wintermute. Ethena also unveiled a new fiat-backed stablecoin, UStb, offering investors a secure option, fully backed by assets in the BlackRock USD Institutional Digital Liquidity Fund.
Ethena maintains its stance on compliance as it works through these difficulties, claiming that it complies with legal standards and manages tokens transparently.
