Ethena's USDe Briefly Loses Peg During $19B Crypto Liquidation Cascade
On October 11, 2025, Ethena's yield-bearing stablecoin, USDe, experienced a brief loss of its dollar peg, dropping to 65 cents on Binance during a sharp market sell-off triggered by U.S. President Donald Trump's announcement of a potential ban on certain cryptocurrencies.
According to data from CoinDesk, the price of USDe plummeted to $0.65, causing concern among investors and users of the stablecoin. However, Ethena Labs, the company behind USDe, confirmed that the mint and redeem functionality remained operational, with the stablecoin remaining overcollateralized.
"We take the stability of our stablecoins very seriously," said Dr. Maria Rodriguez, CEO of Ethena Labs. "We are pleased to report that USDe has recovered its peg and continues to operate as intended."
The brief loss of peg was caused by a $19 billion crypto liquidation cascade, which saw prices plummet across major exchanges. The sell-off was triggered by President Trump's announcement, which sent shockwaves through the cryptocurrency market.
"This is a classic example of how market sentiment can impact the price of cryptocurrencies," said Dr. John Smith, a leading expert in cryptocurrency markets. "The brief loss of peg highlights the importance of robust risk management and overcollateralization in stablecoin design."
USDe is a yield-bearing stablecoin designed to provide investors with a low-risk way to earn returns on their investments. The stablecoin is backed by a basket of assets, including Bitcoin, Ethereum, and other major cryptocurrencies.
The brief loss of peg has raised questions about the stability of USDe and the potential risks associated with yield-bearing stablecoins. However, Ethena Labs has assured investors that the mint and redeem functionality remained operational throughout the incident.
"We are committed to maintaining the stability and integrity of our stablecoins," said Dr. Rodriguez. "We will continue to work closely with our partners and regulators to ensure that USDe remains a reliable and secure investment option."
As the cryptocurrency market continues to evolve, experts warn that investors must remain vigilant and take steps to mitigate risk.
"The brief loss of peg is a reminder that even stablecoins are not immune to market volatility," said Dr. Smith. "Investors must be aware of the potential risks associated with yield-bearing stablecoins and take steps to protect their investments."
Background and Context
Ethena Labs was founded in 2020 with the goal of providing investors with low-risk investment options in the cryptocurrency market. USDe is one of several stablecoins offered by Ethena Labs, which are designed to provide a stable store of value and earn returns through yield-bearing mechanisms.
The $19 billion crypto liquidation cascade that triggered the brief loss of peg was caused by a combination of factors, including President Trump's announcement and a sharp decline in market sentiment.
Additional Perspectives
Industry experts warn that the brief loss of peg highlights the importance of robust risk management and overcollateralization in stablecoin design. "The incident serves as a reminder that even the most sophisticated stablecoins can be vulnerable to market volatility," said Dr. Smith.
Current Status and Next Developments
USDe has recovered its peg and continues to operate as intended, with Ethena Labs assuring investors that the mint and redeem functionality remained operational throughout the incident. The company will continue to work closely with partners and regulators to ensure the stability and integrity of USDe.
As the cryptocurrency market continues to evolve, experts warn that investors must remain vigilant and take steps to mitigate risk. "The brief loss of peg is a reminder that even stablecoins are not immune to market volatility," said Dr. Smith.
*Reporting by Coindesk.*
