Ethena Protocol to Activate Fee Switch Based on Wintermute's Revenue-Sharing Proposal

The Ethena Protocol has agreed to activate a fee switch within its network based on Wintermute's revenue-sharing proposal.

In November, Wintermute, an algorithmic trading firm, proposed altering the ENA token distribution scheme by implementing a fee switch for the Ethena Protocol. The proposal aimed to establish a clear mechanism for allocating protocol earnings to its holders.

On November 15, the Ethena Foundation announced that Wintermute's proposal had been approved by the Risk Committee. The Foundation would collaborate with the committee to finalize parameters for enabling the fee switch by November 30, followed by the implementation of precise mechanics.

Wintermute's proposal, while lacking specifics on revenue allocation or the fee switch mechanism, suggested adjusting the circulating USDe supply, average protocol revenue, and the spread between USDe's annual percentage yield (APY) and market rates.

The proposal also requested Ethena to optimize the fee switch configuration considering the increasing USDe supply and competitive staked USDe returns. Additionally, it sought confirmation that future revenue would be allocated to advance the protocol under ENA and sENA supervision.

The Ethena Foundation, upon reviewing the proposal, noted its potential benefits for the protocol and its ecosystem. The Foundation further clarified that all earnings generated by the Ethena Protocol would be exclusively dedicated to the protocol's development and not used by Labs or development services provider entities.

Furthermore, any protocol revenue allocated for purposes beyond USDe rewards and the Reserve Fund would be subject to governance approval.