Complex topic here, and one where I will uncharacteristically side with Ethena partly while (also uncharacteristically) agreeing with Sam directionally. First, Ethena redemptions. I see at least $980m in USDC alone in their major addresses. They also hold basically the entire $1.8b USDtb supply (bc no one else wants it; BUIDL underperforms other tokenized tbills materially, and USDtb just inserts Ethena for an extra layer of fees and counterparty risk, further lowering the appeal to investors). So that’s $2.7b sitting in cash equivalents, easily verifiable onchain. That’s a pretty healthy reserve vs $8.6b total supply already. Moving into harder-to-verify numbers, Ethena claims an additional $3.3b in unencumbered stables. That puts 58% of all USDe backed by USDC or USDtb *that isn’t even deployed as collateral*. That seems pretty unlikely to depeg unless you imagine fraud risk at Ethena or a custodian to be high. If this much cash is on hand, it’s not stressful to redeem. Now, let’s move onto Sam’s claims. > You, as the lender on these protocols, have signed up for underwriting 3b+ (31.5% of balance sheet) to USDe. I find this an astonishing about-face from when Sam - an early angel investor in Ethena Labs - was gung-ho about Sky (then called MakerDAO) mysteriously giving USDe vaults an enormous credit line and hardcoded $1 oracle price, despite USDe having been completely untested and new. To see him now touting zero exposure to USDe should either ring alarm bells or be seen as a shallow PvP post aimed at Spark competitors. The years-long failure to institute consistent risk assessments while maintaining a major conflict of interest makes me firmly believe the latter. BUT (and I hate that there is a but) he is 💯 spot on with this: > This is a dangerous game, and we need to grow up if we are ever to be taken seriously by TradFi. This is why I am supporting DeFi ratings as a check on the major players in this industry to support low-risk DeFi as the goal of Ethereum. Spark is itself a huge, repeat offender in team COI management (most recently asking Spark to invest $4m into an unknown broker that the team already got into for $400k If there’s anything that everyone has learned this past week is that there is a huge role for someone like @CredoraNetwork - free of perverse incentives like curator fee-maxing and undisclosed deals to add risky assets to what were originally launched as blue chip vaults. Institutional depositors, I have little sympathy for - even if many of them appear to be borderline financially illiterate. But many depositors - especially through consumer-facing apps and fintechs - are in DeFi because they don’t have reliable financial services access. That also means they don’t have experience to know how to evaluate and monitor their investments. Risk scoring by a neutral 3rd party won’t fix all of the weak risk management practices that were exposed as rampant this week. But it’s a good first step down a very long road, and Spark and Morpho both deserve credit for recognizing this and expanding Credora coverage.