Ethena, the synthetic dollar protocol built on Ethereum, has made unanticipated changes to the tokenomics of its governance token ENA, but some of those decisions have sparked outrage amongst its community of users.
The goal of these revised mechanisms would be “more closely aligning the growth and use” of its synthetic dollar-pegged stablecoin USDe with its governance token ENA, said Ethena Labs, which is the entity behind the protocol, in a blog post.
As part of its plans to add more functionality for ENA, the protocol has introduced the ability to stake these tokens with LayerZero or Symbiotic in generalized staking pools, in addition to the ability to lock up tokens within Ethena and Pendle Finance.
While these additional avenues for yield seem lucrative at first, some users were less receptive to the fact that they may now be forced to lock up half the ENA distributed to them in an airdrop.
Ethena said these requirements would take effect from June 17, and users would be required to distribute lock ENA in either Ethena, PT-ENA on Pendle Finance, or generalized restaking pools. Failing to do so, would result in all the user’s unvested ENA to be redistributed to other users who take part in locking up their tokens.
“To be clear: the intent of the above is to incentivize a realignment of $ENA holders from mercenary capital to long term aligned users,” said Ethena Labs.
“None of the $ENA which is forfeited as a result of not meeting the conditions above will be retained by the foundation, team or investors – it is solely to benefit users aligned with the ecosystem,” they added.
Several members of the community took to social media platform X to voice their criticism against Ethena’s proposed forced vesting period, with one pseudonymous user questioning ENA’s role as a governance token given the fact that there was no onchain vote carried out before Ethena implemented these changes.
“First we got our monthly unlock changed into weekly unlock overnight. Then now we are forced to lock 50% of our unlocks. What’s the point of a governance token?” said “@DarkCryptoLord” on X.
“Making vesting airdrop recipients forced holders of ENA discredits the reliability of all future ENA airdrops, and indeed discredits the Ethena team,” said DeFi educator John Galt on X.
On the other hand, crypto research firm Kairos Research said that Ethena’s tokenomics upgrade could be an interesting approach to create a further supply-sink for ENA. While the researchers believe that the vertical integration of Ethena makes sense, they are unsure if restaking a volatile governance token is the best solution for protocol security.
