Ethana’s yield-bearing stablecoin, USDe, briefly lost its 1:1 dollar peg during the recent market sell-off triggered by US President Donald Trump’s announcement of an additional 100% tariff on China.
On Binance, USDe fell to 65 cents before quickly regaining parity with the dollar in what is considered the largest cryptocurrency liquidation event by US dollar value. Over $19 billion in liquidations took place in just 24 hours.
USDe, which currently yields 5.5% to its holders, is backed by a mix of cryptocurrencies and uses a basic trading strategy, a financial setup that aims to profit from price differentials between the spot and futures markets.
Trump’s shock announcement sent investors fleeing to safe havens like gold and US Treasuries.
The decline in USDe had outsized effects, according to crypto trader and economist Alex Krüger, as tokens that are not as actively traded on centralized exchanges “did not suffer as much” and some quickly recovered from the decline.
Indeed, exchanges like Binance and Bybit marked the price closer to real-time trading, while lending protocols like Aave had hardcoded it at $1, which shielded them from some of the immediate impact of the brief dip.
Ethena Labs said in a social media post that USDe remains over-collateralized and that widespread liquidations are affecting the price of USDe in the secondary market.
“We can confirm that the mint and buyback functionality has remained operational without any downtime, and USDe remains oversized,” Ethena Labs wrote in the post.
“Due to liquidations, perpetual contracts have been and continue to trade below the spot price. This creates unexpected additional uPNL within USDe as Ethena is short of these contracts, which is currently being realized to the benefit of the protocol,” the project added.
Binance said it was reviewing affected accounts and liquidations, as well as “appropriate compensation measures.”
Ethena’s governance token, ENA, fell as much as 40% during the fall before starting to recover. That’s down almost 25% in the last 24 hours.
