Clearing Up the Misunderstanding Around Ethena's ADL Protocol

BearMarketBard · 2026-02-13T06:08:44+00:00

Ethena's founder clarifies misconceptions about the project's ADL protocol, emphasizing its adherence to standard practices and a commitment to zero leverage. This approach reduces risks associated with deleveraging events, ensuring user protection through transparent operations and a strong asset allocation strategy.

BearMarketBard

2026-02-13 06:08:44

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A recent misunderstanding surrounding Ethena’s ADL (Automatic Deleveraging) protocol has prompted the project’s founder to set the record straight. In a statement reported by Foresight News, the founder addressed misconceptions about the protocol’s nature and Ethena’s risk management approach.

The Truth About Ethena’s ADL Mechanism

Contrary to what some may believe, Ethena has never operated a proprietary or special ADL protocol distinct from standard industry practices. The founder stressed that all potential risks associated with ADL have been thoroughly documented in Ethena’s official materials. This transparency stands in marked contrast to platforms that obscure their risk frameworks. Rather than relying on opaque deleveraging mechanisms, Ethena has built its infrastructure around a fundamentally different operational model.

How Zero-Leverage Architecture Reduces Risk

The key differentiator in Ethena’s approach is its commitment to maintaining zero leverage across operations. This strategy eliminates the need for aggressive automatic deleveraging events that plague other protocols. Coupled with daily profit and loss settlements, Ethena ensures that users face significantly reduced exposure to the kind of cascading liquidations that can destabilize other platforms.

Eight Years of Proven Safety

The security of Ethena’s model is further reinforced by its asset allocation strategy. The vast majority of funds are held in BTC and ETH across custodial platforms with over eight years of operational history—a period during which none have experienced ADL incidents. This long-term track record demonstrates the resilience of this approach.

Why This Clarification Matters

By directly addressing the misunderstanding about its ADL protocol, Ethena reinforces its commitment to operational clarity and user protection. The combination of zero-leverage mechanics, daily settlements, and conservative asset custody creates a framework where ADL becomes a theoretical concept rather than a practical concern for users.

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