Ethena Tokenomics Change Sparks Community Outrage

Ethena Labs has announced an overhaul to its tokenomics, which now requires airdrop recipients to lock up at least half of their ENA tokens. This unexpected move caught users off-guard and caused an uproar.

Under the new rules, ENA airdrop recipients will have to lock up 50% or more of their airdropped tokens or risk losing their unvested ENA tokens. The rule went into effect on June 17—several months after the April ENA airdrop.

The team said that by enforcing this rule, they want to encourage long-term holders instead of attracting “mercenary capital”—funds used by investors or traders to make a quick profit at the expense of the long-term stability of the protocol.

The team pointed out that none of the unvested tokens will go to the organization.

“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.” the blog post read.

The announcement has caused the price of ENA to drop to $0.58, a decrease of 18% n the past 24 hours, as of this writing. It is among the top underperformers of the day in the top 100 coins by market capitalization.

ENA is the governance token of the DeFi protocol which issues USDe, a yield-earning, synthetic stablecoin pegged to the value of $1. Under the new rules, ENA airdrop recipients will now have to lock up at least half their airdropped tokens in Ethena locking, PT-ENA on Pendle, or Symbiotic Restaking.

This is not the first time Ethena Labs has found itself mired in controversy. In February, Ethena Labs boasted about raising millions from well-known investors, which would later turn out to be untrue due to an inaccurate press release. This prompted the team to admit that they made an “honest mistake.”

Users were dissatisfied with this sudden change in tokenomics, with many pointing out flaws in the protocol or with the team itself.

“Is $ENA meant for governance? Because I’m not sure if I’ve seen any voting proposal that came out prior to this. First, we got our monthly unlock changed into weekly unlock overnight. Then now we are forced to lock 50% of our unlocks,” one Twitter user wrote. “What’s the point of a governance token?”

Another user wrote off the narrative of mercenary capital entirely.

“Changing  our vesting schedule and now forcing 50% to be staked is only trying to hold value until team and investor unlocks in six months,” the user said.

Meanwhile, a user said that the Ethena team has lost its credibility, as they can change the rules at any time—adding that users will always have to tread with caution when engaging with the Ethena ecosystem going forward.

“Making vesting airdrop recipients forced holders of ENA discredits the reliability of all future ENA airdrops, and indeed discredits the Ethena team.” tweeted DeFi educator John Galt.