Ethena Labs Under Fire for Controversial Token Distribution in Farming Event

Ethena Labs is under scrutiny following claims regarding its recent crypto-farming activities involving 180 million Ethena tokens.

On October 27, crypto investigator Nomad raised concerns that Ethena’s team possesses 25% of the total staked ENA tokens in its current Season 3 farming event, which is utilized for earning Sats. This situation has led to ethical questions, with Nomad warning that it could result in the dilution of rewards for legitimate participants, particularly those holding ENA and USDe tokens.

While Ethena has denied any misconduct, it has not provided a detailed response to the allegations. The investigation highlighted that six wallets associated with Ethena received a substantial amount of ENA tokens from a Coinbase Prime Custody account, which had received over 3 billion ENA tokens in August, likely earmarked for the Ethena core team and foundation.

After the launch of SENA staking in September, these wallets acquired 180 million ENA tokens and have been listed on the Sats farming leaderboard. Besides accumulating Sats, these wallets also earned rewards in Ethereal (ETRL). Nomad pointed out that the staked ENA tokens contributed to 20% of the Ethereal points allocated to the community, raising concerns about the transparency surrounding the funding and revenue derived from the reported $2.6 billion user fund.

The crypto community has responded to the allegations, urging Ethena to clarify its position. In defense, Ethena stated that the staked ENA tokens in question are foundation tokens that are eligible for participation, promising further clarification to address the accusations.

Additionally, in a significant move, algorithmic trading firm Wintermute announced on October 25 that it would accept Ethena’s USDe as margin collateral for over-the-counter crypto trading, allowing clients to use USDe for various transactions, including options and forward trades.