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- Chaos Labs partners with Ethena Labs to stabilize the USDe token through real-time reserve validation via Edge Proof Oracles.
- The integration uses delta-hedging and short selling of Bitcoin/Ether futures to ensure USDe’s peg remains stable with the dollar.
- Transparency and security are enhanced through zk-SNARKs and real-time alerts, ensuring USDe’s reserves are always monitored and secure.
Chaos Labs, a highly-regarded risk management firm has entered into a strategic partnership with Ethena Labs to ensure the USDe synthetic dollar token gain significant stability. Through this agreement, the viability of USDe can be well substantiated since third-party validation of reserves is critical in the volatile cryptocurrency market.
This is achieved through integration with Chaos Labs’ Edge Proof Oracle to confirm the reserves of USDe in real time. These oracles will not only make sure that the total dollar value of USDe is enough to back up the circulation but also make sure that reserves are in accordance with the properly defined and delta-neutral governance. It is designed to prevent the token from destabilization in the market:
Edge Proof Oracles in USDe Transparency
The oracles will thus use an automated delta-hedging approach to enhance its stability of the peg with the US dollar. To hedge such risks, the acquisition company short sells Bitcoin and Ether futures to mitigate any adverse movements in this market. The main objective is to request fluctuations in the prices of digital assets for the balanced anchoring of the USDe.
In the past few weeks USDe seriously experienced changes in its value: the rate was 0.982 for Tether and 0.988 for USDC. These indicated vulnerability in the exposure of the token especially after a huge cyber attack in Bybit’s ether derivatives market. The loss of Ether happened as a result of the breach which raises the prospects of volatility connected with USDe.
The integration of Chaos Labs achieves these goals by constantly keeping track of USDe’s reserves. The Edge Proof oracles will also maintain the records of the token balances and also audit the collateral behind the USDe. These oracles, with the help of external data from custodians and centralized exchanges CEXs, make sure that the USDe reserves are transparent, secure, and scalable.
Ethena’s Commitment to USDe Stability
Usability and user trust is dependent on the importance of transparency. That means that the oracles will alert the status in real-time everytime reserve levels reach below set thresholds. This information will be made available on Ethena’s transparency section so that stakeholders can keep track of the status of USDe reserves all the time.
To ensure privacy, the oracles employ zk-SNARKs to attest to the correctness of reserve information while keeping such information secure. With over 70 billion dollars in volume, Chaos Labs has been offering risk management services to DeFi protocols such as AAVE, Tether, and GMX.
With this integration, Ethena underlines its mission to provide the stable and safe synthetic dollar token. Concerning proper functioning and placing its brand within the digital currency market, this partnership helps USDe to maintain its steadiness in the market.
