The proposal from the Ethena community focuses on introducing Ethereal DEX as a means to enhance position management for USDe.

The community involved in the decentralized finance (DeFi) landscape for the USDe stablecoin has made a significant move. Eethena A proposal titled 'Introducing Ethereal: A Request for Ethena Governance Approval' has been submitted, seeking the green light for a new type of exchange that will employ USDe in its operations to be connected with the Ethena infrastructure for hedging and liquidity management.

This initiative marks the introduction of Ethereal, a decentralized trading platform designed for both standard and perpetual trading, leveraging USDe and expected to launch on the upcoming Ethena Network 55. They're asking for community support for its implementation, which would involve a thorough technical review process by the Ethena Foundation along with the Risk Committee, and the community is also seeking technical guidance for deploying Ethereal into their network for optimal integration.

Set to launch its version 1 with a testnet anticipated by Q4, Ethereal will function as a Layer 3 application chain within the Ethereum Virtual Machine (EVM), allowing it to process transactions on the Ethena Network. This structure aims to capitalize on the benefits of separate blockspace while fostering collaborations within the Ethena ecosystem. Besides supporting a detailed on-chain exchange engine, Ethereal is set to provide a framework for various other applications utilizing USDe, which could introduce advanced features like borrowing and lending capabilities to elevate the main DEX’s offerings.

Beyond just increasing utility and demand for USDe, there's an opportunity for the Ethena community to share in a proposed 15% allocation of any forthcoming governance tokens from Ethereal if this proposal is passed, suggesting that this allocation be allocated among ENA token holders.

This proposal emphasizes the interconnected benefits of Ethereal and Ethena, urging the community to support the integration of Ethereal in the near future.

What Is USDe And How Does It Function?

Ethena Labs presents a crypto-driven solution as an alternative to traditional financial systems. This approach holds promise for adapting to contemporary financial needs. USDe stablecoin presents a flexible framework by engaging delta-hedging strategies, utilizing collateral sourced from Ethereum and Bitcoin.

It is fully collaterized and can be effortlessly integrated in both centralized and decentralized financial markets. This stablecoin maintains its value peg through delta-hedging arrangements involving collateral the protocol manages, ensuring a relatively consistent value against both current cryptocurrency assets and future-oriented positions.