Ethena Labs Accused of Self-Farming in Its S3 Event Using 180M ENA Tokens

Ethereum-based synthetic dollar protocol Ethena Labs was accused of participating in one of its recent crypto-farming events using 180 million ENA tokens.

Ethereum-based synthetic dollar protocol Ethena Labs was recently accused of participating in one of its crypto-farming events using 180 million Ethena tokens.

On Oct. 27, crypto investigator Nomad alleged that the Ethena team owns 25% of the total staked ENA (SENA) in its Season 3 farming event, which is being used for farming Sats, which are rewarded to users for participating in various actions in the Ethena ecosystem.

While questioning the team’s ethics, Nomad warned that the move would significantly dilute the rewards of legitimate participants, specifically Ethens (ENA) and Ethena stablecoin (USDE) holders.

Ethena did not immediately respond to Cointelegraph’s request for comment on the allegations. However, the protocol denied the allegations of wrongdoing.

According to Nomad, the Coinbase Prime Custody address had received over 3 billion ENA tokens in August, which were potentially locked ENA tokens for the Ethena Labs core team and the Ethena Foundation.

Following the SENA staking launch back in September, six crypto wallets belonging to Ethena received 180 million ENA tokens from the Coinbase Prime Custody address. All six wallets have been featured on the Ethena leaderboard for Sats farming.

In addition to Sats farming, the wallets with possible links to the Ethena team also earned Ethereal (ETRL) rewards.

The investigators further alleged that the Ethena team’s 180 million staked ENA tokens accrued 20% of all Ethereal points dedicated to its community members. Nomad highlighted the importance of trust when dealing with centralized finance entities:

“Trusting a centralized entity with your funds is already risky enough as it is. But when that entity is also actively participating in its own defi protocols, it adds a whole new layer of conflict of interest.”

The investigator pointed out anomalies in Ethena’s previously hosted Season 1 and 2 farming events that negatively impacted users, with many suffering financial losses.

The allegations against Ethena Labs garnered the interest of crypto community members on X, many of whom urged the protocol to respond.

According to Ethena, the staked ENA in question is unlocked foundation tokens that are eligible for participation. The protocol will provide further clarification to counter the accusations.

On Oct. 25, algorithmic trading firm Wintermute announced accepting Ethena’s USDe as margin collateral for crypto OTC trading.

As a result of the partnership, Wintermute’s clients can post “USDe as collateral for options, [credit default swaps], forward, and spot trading.”