USDe Stablecoin Briefly Loses Dollar Peg Amid Market Crash
Ethena Labs’ stablecoin USDe briefly fell below its one-dollar peg on Friday. This happened hours after U.S. President Donald Trump announced a new 100% tariff on China. The announcement caused panic selling across the crypto market. Traders sold assets to move into gold and U.S. Treasuries.
On Binance, USDe dropped to 65 cents before recovering to its intended value. USDe is a “synthetic dollar” and the third-largest stablecoin, with a market cap near $14 billion.
Massive Selloff Triggers $16 Billion in Liquidations
Data from Coinglass shows over $16 billion in bullish crypto positions were liquidated within 24 hours. More than 1.6 million traders were affected. This event ranks among the largest liquidations in crypto history.
Binance said it is reviewing the situation and will consider “appropriate compensation measures” for users. The exchange confirmed that three stablecoins, including USDe, briefly lost their pegs during the turmoil.
Ethena Labs stated that USDe remained “over-collateralized” throughout the volatility. The company confirmed that mint and redeem operations worked without downtime. They attributed the price dip to “turbulent market conditions and widespread liquidations” but said the system functioned as designed.
Yields and Governance Token Impacted by Market Volatility
USDe offers a 5.5% yield, supported by a “basis trade” strategy. This method profits from differences between spot and futures markets. The strategy performs well during high trading activity but faces challenges in market crashes. During the selloff, Ether’s hourly funding rate hit its lowest level since the 2024 yen-carry trade unwind, reducing returns for USDe holders.
Ethena’s governance token, ENA, dropped as much as 43% during the crash, according to CoinGecko. It has since partially recovered. At the time of writing, ENA trades at $0.3724, down 10% from 24 hours ago.
Despite the rebound, the brief USDe depeg raised concerns among investors relying on stablecoins for stability in digital markets.
