Censorship Resistance

How USDe furthers censorship resistance

Assets backing USDe remain in "Off-Exchange Settlement" institutional grade solutions at all times. The only time collateral flows between custody and exchange is to settle funding or realized P&L.

Ethena utilizes "Off-Exchange Settlement" (OES) providers to hold backing assets. This enables Ethena to delegate/undelegate backing assets to centralized exchanges without being exposed to exchange-specific idiosyncratic risk.

While using an OES provider requires a technological dependence upon the OES provider, it does NOT mean counterparty risk has simply been transferred from the exchange to the OES provider. OES providers typically, where not using an MPC solution, employ a bankruptcy-remote trust framework to ensure the OES provider's creditors have no claim to the assets. In the case of an OES provider failing, these assets outside the provider's estate and not exposed to the credit risk of the custodian. Empirically, Ethena's integrated providers for custody services have never lost a dollar of users funds compared to the $7bn lost in DeFi hacks, and >$15bn in CeFi insitutions last cycle.