Binance has voluntarily announced compensation for users who suffered losses due to platform disruptions Friday evening that triggered a significant drop in the prices of Wrapped Beacon Ether (wBETH), Binance Staked SOL (BNSOL), and Ethereum’s synthetic dollar USDe.
“Due to significant market fluctuations over the past 16 hours and a large influx of users, some users experienced issues with their transactions. I deeply apologize for this. If you have suffered losses attributable to Binance, please contact our customer support to register your case,” Yi He, co-founder and chief customer officer of Binance, said on X.
He added that the exchange will review account activity on a case-by-case basis to determine compensation, emphasizing that losses due to market fluctuations and unrealized profits are not eligible for compensation.
The price of Binance’s Wrapped Beacon Ether (wBETH) plunged as low as $430 around 9:40 p.m. UTC on Friday, representing a staggering 88% discount to the spot price of Ether-Tether (ETH/USDT), which was trading above $3,800 at the same time.
Binance Staked SOL (BNBSOL) also fell to $34.90, trading at a massive discount to the solana spot price. Meanwhile, Ethena’s synthetic dollar USDe, which uses delta-neutral cash-and-carry, fell rapidly to 65 cents around the same time wBETH and BNBSOL collapsed.
Explanation of the accident
Tokens like wBETH and BNBSOL are designed to closely track the spot price of their underlying assets.
Binance valued these wrapped assets based on their prices in the spot market, as noted by AltLayer founder YQ Jia on
However, as Binance’s infrastructure came under strain due to increased market volatility and massive liquidations, market makers and arbitrageurs were unable to access primary markets and execute trades efficiently, causing a breakdown in price alignment. This led to a crash of wrapped tokens.
“Binance represents maybe 50% of global spot volume. When they [market makers] can’t access Binance – whether to hedge their positions or even see prices – they are flying blind. Do you want to bid for wBETH at $2,000 when you can’t see what’s happening in the larger market? Of course not,” Jia noted.
Jia added that the inability of market makers to participate has created a liquidity vacuum, reminiscent of portfolio insurance in 1987 – “mechanisms designed for normal markets that become procyclical accelerators in crashes.”
Corrective measures
Within 24 hours of the crash, Binance announced plans to use conversion rate pricing for wrapped assets.
Instead of valuing wBETH based on volatile and distressed transactions in the spot market, the exchange would now price it based on the underlying stake ratio, which represents the actual amount of ETH each wrapped token represents.
This change means more stable and accurate valuation during times of market stress by disconnecting wrapped token prices from short-term spot market fluctuations.
