Ethena Labs, a leading blockchain technology firm, has announced its latest integration with Chaos Labs’ Edge Proof of Reserves Oracle technology. This move is aimed at enhancing the risk management framework for its synthetic dollar token, USDe. Designed as a synthetic stablecoin, USDe keeps a soft peg with the U.S. dollar through an automated delta-hedging strategy that balances the fluctuation in cryptocurrency prices by shorting Bitcoin and Ether perpetual futures.
Ethena Labs’ integration with Edge Proof’s oracles offers a new level of credibility to the reserves of USDe. The Edge Proof oracles will independently verify the total dollar value of USDe’s reserves, along with the reserve coverage of USDe’s supply. They will also confirm that the reserves are governance-approved and delta-neutral.
Edge Proof’s oracles operate by continuously monitoring the reserve levels of tokens and comparing them to the collateral backing these tokens. The process is streamlined by integrating off-chain data from custodians and centralized exchanges into the on-chain environment. This ensures scalable and robust support for institutional-grade applications.
Users will receive automated alerts about any data anomalies or if reserve levels fall below the required thresholds. Verified data will be readily accessible on Ethena’s transparency page and attestor interfaces, keeping stakeholders continuously informed.
Ethena Labs expressed that this integration ensures continuous, independent verification of reserves, promoting greater transparency and security for all users. The integration leverages real-time, tamper-resistant data, reinforcing Ethena’s commitment to a robust and reliable synthetic dollar.
The integration also leverages Chaos Labs’ reputation and capabilities. The oracles ensure security, privacy, real-time, and transparent data verification, including off-chain or cross-chain reserves. They have secured over $70 billion in volume, providing risk management to DeFi giants like AAVE, Jupiter, GMX, and Tether.
Ethena Labs found itself in the thick of it during the recent Bybit hack, which is now considered the largest heist in crypto history. Ethena’s CEO lauded Bybit’s CEO for his swift response to the crisis. Ethena Labs also reacted promptly to the crisis by handling the largest single day of redemptions and unwinding all unrealized exposure to Bybit within an hour of the news breaking.
Ethena’s USDe experienced some volatility due to the Bybit hack, causing it to dip against USDT and USDC. However, Ethena Labs quickly reassured investors that all assets backing USDe were held off-exchange on a custodian named Copper and that it had a reserve fund sufficient to offset any losses from the Bybit exploit.
Despite the temporary setback from the Bybit hack, Ethena Labs is moving forward and has even revealed its partnership with Chaos Labs to further increase transparency. In other news, South Korea’s leading exchange, Bithumb, announced the addition of $ENA to the KRW market, along with an associated airdrop event. This marks another significant milestone for Ethena Labs as it continues to cement its position in the global crypto landscape.