Ethena Labs Integrates Chaos Labs’ Data Authenticity Technology

Ethena Labs has just revealed that it integrated Chaos Labs’ data authenticity technology, Edge Proof oracles, to strengthen the risk management framework for its synthetic dollar token USDe.

Ethena’s USDe is a synthetic stablecoin that maintains a soft peg with the U.S. dollar via an automated delta-hedging strategy that shorts Bitcoin and Ether perpetual futures to balance changes in the prices of cryptocurrencies.

Ethena Labs’ Latest Move Adds Credibility to USDe’s Reserves

Ethena Labs has integrated Chaos Labs’ Edge Proof of Reserves Oracles to enhance the risk management framework for its synthetic dollar token, USDe. This consolidates the trust between the team and the community as Edge Proof oracles will independently verify the total dollar value of USDe’s reserves and the reserve coverage of USDe’s supply. The oracles also confirm that reserves are governance-approved and delta-neutral.

The Edge Proof of Reserves (PoR) oracles work by constantly monitoring the reserve levels of tokens, comparing them to the collateral backing them. This integration utilizes off-chain data from custodians and centralized exchanges within the on-chain environment to ensure scalable support for institutional-grade applications.

Users will receive automated alerts for any data anomalies or if reserve levels fall below required thresholds. Verified data will be accessible on Ethena’s transparency page, ensuring that stakeholders remain informed.

“This integration ensures continuous, independent verification of reserves, fostering greater transparency and security for all users. By leveraging real-time, tamper-resistant data, Ethena reinforces its commitment to a robust and reliable synthetic dollar,” Ethena Labs stated.

By partnering with Chaos Labs’ Edge oracle, Ethena benefits from the oracle provider’s esteemed reputation and capabilities. The oracles guarantee security and privacy along with real-time and transparent data verification, including reserves held off-chain or across different blockchains. They have provided risk management to decentralized finance (DeFi) giants, securing over $70 billion in volume.

Ethena Labs Executives Praise Bybit’s Disaster Response

Ethena Labs, along with many protocols in the crypto ecosystem, expressed relief after the Bybit hack, reportedly the largest heist in crypto history, did not incapacitate the exchange.

The CEO of Ethena Labs took to X (formerly Twitter) to commend Bybit’s CEO for his swift response and transparent communication during the crisis. Ethena also reacted efficiently to the situation, managing the largest single day of redemptions and unwinding all unrealized exposure to Bybit within an hour of the breach.

The Bybit hack—a coordinated attack attributed to the Lazarus Group—resulted in the loss of $1.4 billion in cryptocurrencies, putting Ethena Labs at risk as investors feared a depeg for USDe. However, Bybit’s CEO assured customers that withdrawal channels remained open despite delays, and the exchange received support from other protocols to prevent mass panic among investors recovering from the FTX fallout.

With a focused recovery plan ahead, Bybit also offered a reward of 10% of recovered funds—up to $140 million—to on-chain sleuths assisting in the retrieval of stolen assets. Following the attack, Bybit’s communication reassured the industry.

The Bybit Hack Affected Ethena Labs’ USDe

Due to the Bybit hack, Ethena’s USDe faced some volatility, dropping to 0.982 against USDT and 0.988 against USDC. Investors were concerned about the exposure of the protocol to Bybit’s ether derivatives market. Nevertheless, Ethena Labs calmed fears by confirming that all assets backing USDe were held in a custodian named Copper, which allows for collateral posting without using centralized exchanges.

Despite $30 million in exposure to Bybit through financial derivatives, Ethena managed $123 million in redemptions on February 21. The supply of USDe decreased from $6 billion to $5.88 billion, with a staking ratio drop to 63.5%. Meanwhile, the APY for sUSDe increased to 9.15%, remaining competitive.

Despite the transient dip to $0.98, the median DEX price held steady at $0.9993. Bybit’s status as a key venue for USDe contributed to a decrease in USDe’s balance held on CEXs by 33%. However, increased deposits into Ethereal DEX indicated continued investor confidence in the Ethena network.

Good News from South Korea

While Ethena Labs did experience the repercussions of the Bybit hack, it effectively mitigated damage. The partnership with Chaos Labs aims to enhance transparency for investors moving forward.

Additionally, Bithumb—the leading South Korean exchange—recently added $ENA to the KRW market, coupling the announcement with an airdrop event to attract traders. Restrictions have been implemented for a safe trading environment through controlled buying and selling orders post-launch.