Ethena Labs hasannouncedan overhaul to its tokenomics, which now requires airdrop recipients to lock up at least half of their $ENAtokens. This unexpected move caught users off-guard and caused an uproar.

Under the new rules, $ENAairdrop recipients will have to lock up 50% or more of their airdropped tokens or risk losing their unvested $ENAtokens. The rule went into effect on June 17—several months after the April $ENAairdrop.

The team said that by enforcing this rule, they want to encourage long-term holders instead of attracting “mercenary capital”—funds used by investors or traders to make a quick profit at the expense of the long-term stability of the protocol.

Today marks an important step forward in more closely aligning the growth and use of $USDewith $ENA

The launch of a generalized staking capability for $ENAwith @symbioticfi and @LayerZero_Labs is the first step in adding functional utility for $ENAwithin the Ethena ecosystem pic.twitter.com/TQEZTTV1uQ

— Ethena Labs (@ethena_labs) June 17, 2024

The team pointed out that none of the unvested tokens will go to the organization.

“None of the $ENAwhich is forfeited as a result of not meeting the conditions above will be retained by the foundation, team or investors—it is solely to benefit users aligned with the ecosystem.” the blog post read.

The announcement has caused the price of $ENAto drop to $0.58, a decrease of 18% n the past 24 hours, as of this writing. It is among the top underperformers of the day in the top 100 coins by market capitalization.

$ENAis the governance token of the DeFi protocol which issues $USDe, a yield-earning, synthetic stablecoin pegged to the value of $1. Under the new rules, $ENAairdrop recipients will now have to lock up at least half their airdropped tokens in Ethena locking, PT-$ENAon Pendle, or Symbiotic Restaking.

This is not the first time Ethena Labs has found itself mired in controversy. In February, Ethena Labs boastedabout raising millions from well-known investors, which would later turn out to be untrue due to an inaccurate press release. This prompted the team to admit that they made an “honest mistake.”

Pretty significant about the airdrop, too.

Making vesting airdrop recipients forced holders of $ENAdiscredits the reliability of all future $ENAairdrops, and indeed discredits the Ethena team.

You know all those airdrop spreadsheets people make? Can't count on them, since…

— John Galt (@lurkaroundfind) June 17, 2024

Users were dissatisfied with this sudden change in tokenomics, with many pointing out flaws in the protocol or with the team itself.

“Is $ENAmeant for governance? Because I’m not sure if I’ve seen any voting proposal that came out prior to this. First, we got our monthly unlock changed into weekly unlock overnight. Then now we are forced to lock 50% of our unlocks,” one Twitter userwrote. “What’s the point of a governance token?”

Another user wrote off thenarrativeof mercenary capital entirely.

“Changing our vesting schedule and now forcing 50% to be staked is only trying to hold value until team and investor unlocks in six months,” the user said.

Meanwhile, a user said that the Ethena team has lost its credibility, as they can change the rules at any time—adding that users will always have to tread with caution when engaging with the Ethena ecosystem going forward.

“Making vesting airdrop recipients forced holders of $ENAdiscredits the reliability of all future $ENAairdrops, and indeed discredits the Ethena team.” tweeted DeFi educator John Galt.

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