The Aave governance proposal plans to peg Ethena's USDe to USDT, sparking community concerns about potential conflicts of interest

According to Protos, the Aave governance forum recently proposed a 1:1 pegging of Ethena's USDe with USDT, sparking community concerns about potential conflicts of interest. The proposal suggests replacing the current Chainlink's USDe/USD oracle with the price of USDT to avoid bad debt caused by liquidation.

It is worth noting that both authors of the proposal, ChaosLabs and LlamaRisk, have collaborated with Ethena in the past. MakerDAO community member ImperiumPaper expressed concern about this, likening it to "real estate brokers representing both buyers and sellers."

Critics pointed out that while USDT is fully backed by off-chain assets, USDe relies on ETH long-short positions' delta-neutral strategy and faces negative funding rate risks when market sentiment shifts. Meanwhile, Ethena founder Guy Young denied any conflict of interest and emphasized that the company has established a risk committee to ensure external oversight of product management.