Ethereal Exchange proposes integration with Ethena Network

Mila September 30, 2024

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Key Takeaways

Ethereal proposes a 15% token allocation to ENA holders if integrated with Ethena.
Ethereal aims to match centralized exchange performance with full self-custody.

Ethereal Exchange has submitted a proposal to Ethena governance, seeking community approval to launch a new spot and perpetual exchange built on USDe and integrated into the Ethena hedging engine and liquidity.

A new proposal was made on Ethena governance a few hours ago

Ethereal Exchange is requesting the community approval to launch a new spot and perpetual exchange built on USDe and integrated into the Ethena hedging engine and liquidity

Their proposal includes a 15% commitment of…

— Ethena Labs (@ethena_labs) September 30, 2024

The proposal introduces Ethereal as an integrated spot and perpetual futures decentralized exchange (DEX) built on the upcoming Ethena Network using USDe. Ethereal is requesting direct integration into Ethena-related reserve management from launch to provide a fully onchain venue for managing spot and derivative positions backing USDe.

As part of the proposal, Ethereal is offering a 15% allocation of any potential future Ethereal governance token to circulating ENA holders. This move aims to ensure alignment between Ethena and Ethereal community stakeholders.

Ethereal V1, with a testnet expected in Q4, is designed as an L3 EVM appchain settling to the Ethena Network. The exchange aims to match centralized exchange performance while maintaining complete self-custody and flexibility to support features such as cross-margin, liquidity automation, and portfolio margin. Ethereal’s architecture is reportedly capable of processing 1 million operations per second with sub-20ms latency.

The proposal outlines several potential benefits for the Ethena ecosystem, including increased demand for USDe, improved decentralization through onchain management of USDe backing, and setting a precedent for other applications built using USDe on the Ethena Network.

Ethereal is requesting support from the Ethena community for integration as a venue for executing hedging transactions, subject to satisfactory technical due diligence conducted by the Ethena Foundation and Risk Committee. Additionally, they are seeking technical support for deployment onto the Ethena Network to implement an integration with Ethena’s hedging engine.

A snapshot for voting on the proposal is expected to be released shortly, with community members encouraged to participate in discussions on the governance forum.