MMTC5

The last few days have been incredible to witness. I've never seen a community rally around and engage with passion like this before. Following direct discussions with individuals in the community and validators we have taken onboard some of the concerns, namely: -Ethena is not a Hyperliquid native team -We have other product lines outside of USDH -Our ambitions extend beyond working with just one partner exchange These are valid and we accept the pushback. It appears the decision is a near certainty now and we will respectfully be withdrawing our proposal to allow validators to signal their support elsewhere if they want to. Congratulations to the Native Markets team. You deserve this. While some are complaining about their lack of credibility I think their success here perfectly embodies everything which is so special about Hyperliquid and their community. No one gives a fuck how big you are, your background, pedigree or financial resources. It is a level playing field where emergent players can win the hearts of the community and are given a fair shot at succeeding. To everyone within and outside the community who supported our proposal: thank you. It's a privilege and honour to build alongside you. Also worth calling out the other proposals which were a testament to the quality of teams now in this space and it is great to see us all elevate each other to a higher level. So what happens with Ethena on Hyperliquid going forward? Well we are simply going to do everything we said we would. If it wasn't obvious from our post, clipping 5% on tbill yields into a declining interest rate environment isn't exciting to us at all. In fact it was the least interesting part of our plans. Developing new products with native teams including: -hUSDe native synthetic dollars, -USDe enabled savings and card spending products, -enabling hedging flows on Hyperliquid, -and the wide design space of HIP-3 markets uniquely enabled by Ethena: a) reward-bearing trading collateral, b) modular prime broking, c) perpetual swaps on equities ...is what actually excited us. And we will be putting our full force behind making that a success despite the outcome here. In short, we will do what we have always done since day one: outcompete everyone else on product regardless.

Rough last 24hrs for everyone involved. Firstly want to call out the response from @benbybit and the team. Don't think I've ever seen a team handle crisis communications as well as they did. Stood up to face the music immediately to provide transparent answers to the community. An example for us all to look up to. Ethena handled the largest single day of redemptions and unwound all unrealised exposure to Bybit within an hour of the news breaking. In any event, the unrealised exposure at its peak was always a fraction of the excess reserves behind USDe. At no point was USDe undercollateralised despite Bybit representing >20% of the hedging exposure as the second largest derivative exchange in the world. Even if the unrealised exposure to Bybit had not been reduced to zero within the hour, this exposure could have been lost entirely and USDe would have still been overcollateralised. We hope this event validates some of the design decisions that were made to reduce risk for our users using OES custody solutions. The easy design route was to avoid the costs and the added engineering complexity of custodians within our offchain hedging systems. But we don't make decisions because they are easy, we make decisions we think are right for our users in the long run. It is not good enough to listen to me speak about how we mitigate for these risks in theory, often you need to see it play out in real time with your own eyes to have confidence it actually works at scale. While in the short term this has been painful for many parties involved, I hope we have continued to build confidence and trust from our users on the go forward resilience of the model even in the face of extreme pressure. An event like this was often cited as the single biggest risk to USDe, and we have experienced zero loss to the backing or issues with regards to redemption requests. We are in the process of providing a full write-up on the event to help answer any open questions which we will share via the @ethena account shortly.