When a sudden cascade of liquidations swept cryptocurrency markets, the Ethena Labs–issued stablecoin USDe briefly lost its dollar peg, tumbling to roughly $0.65 against USDT on Binance and shedding more than a third of its value within 24 hours. The drop coincided with a broader market rout that forced over $19 billion in liquidations, creating acute downward pressure across many tokens and especially affecting less liquid assets on centralized exchange order books. External macroeconomic shocks, in particular President Trump’s surprise announcement of a 100% tariff on China, triggered a flight-to-safety that amplified selling into gold and US Treasuries, and intensified forced selling in crypto markets. Traders observed that concentrated sell orders and thin liquidity exacerbated the move, causing sharp, if temporary, dislocations between spot and protocol valuations. Ethena Labs’ design as a yield-bearing synthetic dollar, offering roughly 5.5% yield while targeting a 1:1 USD peg, framed much of the reaction, as holders sought rapid redemptions and secondary market prices diverged from protocol net asset value. The protocol publicly reported uninterrupted minting and redemption throughout the event and maintained over-collateralization, steps that helped preserve long-term stability despite short-term price distortions. Perpetual futures tied to USDe traded consistently below spot during the stress, producing unrealized profits for Ethena’s short positions, which the team expects to realize and use to bolster collateral backing post-crisis. These futures reflected funding rate imbalances that shifted rapidly due to market sentiment under extreme volatility. Lending platforms that hardcoded USDe at $1, including some markets on Aave, were insulated from immediate liquidity shocks, reducing contagion in certain DeFi corridors. Exchanges such as Binance and Bybit adjusted on-chain and order-book prices closer to real-time market levels, exposing USDe to volatile trading and prompting reviews of liquidation events and affected accounts. The episode highlighted questions about price discovery mechanisms, market depth, and the resilience of synthetic stablecoins under extreme stress, lessons that bear on both protocol design and exchange risk management. While the peg recovered shortly after the initial crash, the incident served as a cautionary reminder that stablecoin integrity is central to market stability, and that macro shocks can quickly expose structural vulnerabilities. Ethena Labs confirmed that USDe remained over-collateralized throughout the episode. Regulators and market participants noted the event as part of a larger pattern of market stress.
