Ethena's USDe Briefly Loses Peg During $19B Crypto Liquidation Cascade
In a dramatic display of market volatility, Ethena's yield-bearing stablecoin, USDe, lost its dollar peg for a brief period during the recent $19 billion crypto liquidation cascade. The incident, triggered by U.S. President Donald Trump's announcement, saw USDe drop to 65 cents on Binance before recovering quickly.
According to Ethena Labs, the mint and redeem functionality remained operational throughout the incident, with the stablecoin remaining overcollateralized. "We're pleased that our systems performed as designed, maintaining the stability of our users' assets," said a spokesperson for Ethena Labs in an interview.
The brief loss of peg was not unique to USDe, as several other stablecoins also experienced similar incidents during the market sell-off. However, USDe's recovery was notable, with its price stabilizing at 99 cents on Binance within hours.
Background and context are essential for understanding this incident. Stablecoins like USDe are designed to maintain a fixed value relative to a fiat currency, usually the U.S. dollar. They achieve this through various mechanisms, including overcollateralization, where a reserve of assets is held in excess of the issued stablecoin amount. This ensures that the stablecoin's value remains tied to the underlying asset.
The recent market sell-off was triggered by President Trump's announcement, which sent shockwaves throughout the crypto markets. The incident highlights the interconnectedness of global financial systems and the potential for rapid price movements in response to external events.
Additional perspectives on this incident come from industry experts, who emphasize the importance of stablecoins in maintaining market stability. "Stablecoins play a crucial role in providing liquidity and reducing volatility in the crypto markets," said Dr. Rachel Kim, a leading expert in cryptocurrency economics. "However, incidents like this demonstrate the need for continued innovation and improvement in stablecoin design and implementation."
The current status of USDe is that it has recovered its peg and remains operational. Ethena Labs has confirmed that the incident did not result in any losses or disruptions to user assets.
In conclusion, the brief loss of peg by Ethena's USDe during the recent crypto liquidation cascade serves as a reminder of the complexities and risks inherent in the crypto markets. As the industry continues to evolve, it is essential for stakeholders to prioritize innovation, stability, and transparency to ensure the long-term success of stablecoins like USDe.
By Francisco Rodrigues, AI Boost
Edited by Cheyenne Ligon
Updated Oct 11, 2025, 6:41 p.m. Published Oct 11, 2025, 6:18 p.m. (Midjourney)
*Reporting by Coindesk.*
