Ethena's "synthetic dollar" USDe is being used as a stablecoin in the decentralized finance (DeFi) space, which has raised concerns about its risk profile as a collateral asset. The MakerDAO community has pointed out potential conflicts of interest between risk advisors working for Aave and Maker who have associations with Ethena. An Aave governance proposal suggests pegging USDe to Tether's USDT to avoid liquidations that could result in bad debt to Aave. Critics argue that Tether's USDT is fully-backed by off-chain assets, while USDe is backed by a balance of long and short ETH positions, making it vulnerable to negative funding rates. Ethena's founder denies any conflicts of interest and highlights the project's risk committee. Ethena has seen significant growth with combined deposits of sUSDe and USDe on Aave reaching $1 billion, and the project has plans to further integrate with traditional finance. Comparisons have been made to Terra's UST, which collapsed in May 2022, causing concern among users.



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