Ethena’s synthetic dollar, USDe, lost over $2 billion in market capitalization after briefly losing its dollar peg to Binance. The flash event exposed structural risks in crypto’s stablecoin plumbing.
According to CryptoSlate According to data, the market value of USDe fell from $14.8 billion on October 10 to $12.6 billion on October 12.
The drop coincided with a pricing issue at Binance that also affected wrapped assets like wBETH and BNSOL, temporarily breaking their links to underlying tokens.
At one point, the USDe fell to $0.65 before recovering to parity. Binance later said it had refunded users more than $283 million for losses resulting from the incident.
Within the flash depth
USDe’s price disruption occurred during one of crypto’s largest liquidation events this year.
Crypto markets suffered a steep sell-off after US President Donald Trump promised a 100% tariff on Chinese imports, wiping out more than $20 billion in open interest on digital assets. The resulting rush to safe havens like gold reduced risk appetite and exposed weaknesses in the leveraged crypto markets.
The structure of USDe relies on the basic transaction of shorting perpetual futures, while long positions in the spot market are held via reserves in USDT and USDC. When financing rates fall sharply, this mechanism produces lower returns and puts repayment pressure on the system.
Yet the project maintains that the depeg was localized in Binance and not systemic.
Haseeb Qureshi from Dragonfly noted that USDe “did not de-peg globally,” by pointing out that:
“Although the USDe performed poorly on every CEX, it did not do so uniformly. Bybit briefly reached $0.95 and then quickly recovered, but Binance delisted an insane amount and took forever to regain the peg. The curve fell by only 0.3% in the meantime.”
Additionally, Ethena Labs founder Guy Young confirmed that coin and redemption remained operational the entire time, processing $2 billion in redemptions within 24 hours.
He also pointed out that the asset’s primary liquidity pools such as Curve, Uniswap and Fluid showed fewer deviations, while $9 billion of collateral (mainly USDT and USDC) remained available for immediate redemption.
Considering this, Young said:
“I don’t think it is accurate to describe a USDe depeg where a single location was out of alignment with the deepest liquidity pools that did not experience any abnormal price deviation.”
Why this matters for Bitcoin
While USDe is not marketed as a conventional stablecoin, its growing role in crypto’s financial plumbing means that even small pricing errors can have disproportionate consequences.
This past weekend’s disruption proved how a location-specific disruption can ripple through the markets and cause real losses.
And since USDe is now embedded in various DeFi protocols and centralized exchanges, a short-term gap between market value and the dollar can spill over to other sources of liquidity.
Such disruptions could lead to forced liquidations in the credit markets, reduce liquidity in BTC and ETH trading pairs, and distort the reference price used on decentralized platforms.
Taking this into consideration, OKX founder Star Xu said warned that the market needs to recognize what USDe represents, a tokenized hedge fund that is not a “1:1 pegged stablecoin.”
According to him:
“Such funds typically employ relatively low-risk strategies such as delta-neutral basic trading or money market investments, but they still carry inherent risks – including ADL events, exchange-related incidents and custodian security breaches.”
Xu noted that platforms using USDe as collateral should apply adaptive risk controls instead of treating them like traditional stablecoins. He argued that ignoring the asset’s structural nuances could introduce systemic exposure to the broader crypto market and turn a localized mistake into an industry-wide crisis.
