USDe's 90 minutes: a misinterpreted incident of a broken anchor

ArkStream

特邀专栏作者

2025-10-13 09:11

This article is about 7064 words, reading the full article takes about 11 minutes

Overall, this is a local liquidity dislocation rather than a mechanism-based risk event.

TL;DR

Brief de-pegging, rapid recovery: On October 11, 2025, USDe briefly dropped to $0.65 on the Binance spot market, but this only lasted a few minutes. The de-pegging lasted approximately 90 minutes (between $0.75 and $0.98), with a trading volume exceeding 780 million tokens. The price fully stabilized to around $0.99 by 06:45 Beijing Time.
Localized liquidity misalignment: Fluctuations were primarily concentrated on Binance. Price deviations on other major exchanges and decentralized exchanges (DEXs) like Bybit, Curve, and Uniswap were all within 0.3%, indicating a single point of liquidity imbalance rather than a systemic issue.
Not the trigger for the market crash: BTC, ETH, and SOL led the decline at 04:45 Beijing time, triggering a chain reaction of liquidations. USDe's price deviation is more like a secondary liquidity release rather than a triggering event for the decline.
The protocol's robustness has been proven: Ethena successfully processed over $2 billion in redemptions within 24 hours without any downtime or delays. The Aave oracle price remained in the $0.99–$1.00 range, with no signs of forced liquidations, defaults, or liquidity runs on the system.
Systemic risks are controllable: The three major exchanges (Binance, Bybit, and OKX) hold a total of approximately US$2 billion in risk funds, which can theoretically withstand a liquidation shock of approximately US$200 billion under similar market conditions, significantly reducing the risk of triggering ADL (automatic deleveraging).

On October 11, 2025, USDe briefly depegged on Binance to $0.65, but this lasted only a few minutes. The depegging lasted approximately 90 minutes (from $0.75 to $0.98), with over 780 million tokens traded. During the same period, prices on other major exchanges and on-chain markets remained largely within the $0.99–$1.00 range, with limited volatility. Overall, this was a localized liquidity misalignment rather than a mechanism-based risk event—the liquidation chain triggered by the sharp drop in BTC was amplified in localized, shallow trading venues. The Ethena protocol, despite high volatility , maintained a stable hedging structure, smooth redemption paths, and robust oracle system , successfully withstanding real-world stress testing, demonstrating the resilience and self-healing capabilities of its stability mechanisms.

Ethena's USDe stability mechanism has been tested in practice

USDe’s brief price dislocation on Binance

On October 11, 2025, USDe briefly decoupled from Binance, with the lowest price reaching $0.65, which lasted for about 90 minutes. During this period, the trading volume exceeded 780 million coins.

During the same period, Bybit, the second largest exchange in the spot market, also saw a slight deviation in its USDe/USDT trading pair, but the deviation was limited and the trading volume was low, so the impact on the overall market was negligible.

Overall, the USDE depegging on Binance lasted approximately 45 minutes, with a maximum depegging amplitude of approximately −35% (instantaneously). During this period, total trading volume exceeded 780 million USD. This incident is more akin to a liquidity flash crash than a structural risk in the protocol.

USDe's depegging and repeal process on Binance Spot (USDE/USDT)

USDE/USDT price chart on Binance.

USDE/USDT price chart on Bybit exchange

USDe has not experienced any systematic deviation on the DEX side (Uniswap/Curve)

Compared with Binance’s deep depegging, on-chain DEXs (such as Curve and Uniswap) only experienced slight and delayed price fluctuations, with the lowest price reaching approximately $0.995. They remained stable overall with almost no depegging.

Uniswap’s USDe/USDT price chart

Curve's USDe/USDC price chart

USDe on Binance: Growth Trajectory and Post-Event Adjustments

Starting September 22, 2025, Binance officially launched the USDe Rewards Program, offering users up to 12% annualized returns. The platform records users' minimum USDe holdings across spot, fund, and margin accounts (including collateral) through a random daily snapshot. Rewards are calculated annually and distributed to spot accounts every Monday. The program runs from September 22 to October 22, 2025. Users holding at least 0.01 USDe for at least 24 hours are eligible to participate.

Driven by this incentive plan, the USDe stock on the Binance platform once exceeded US$5 billion.

Currently, USDe’s lending and contract mortgage functions on Binance are suspected to be temporarily closed, and verification cannot be performed on the front end. The relevant leverage and lending data are also not disclosed.

Based on subsequent announcements and parameter adjustments, it is speculated that Binance may directly use the USDe price index as the core price feed reference during the depegging event, with the lowest transaction price being approximately $0.66.

After the October 11 incident, Binance adjusted USDe’s risk control parameters to improve system robustness. This included incorporating redemption prices into price indices, setting minimum transaction price limits, and increasing the frequency of parameter reviews to cope with potential market fluctuations.

In addition, according to Binance’s latest announcement, the platform has launched a compensation plan of approximately US$283 million for users affected by this incident (including USDe, BNSOL and WBETH depegging-related assets).

Binance's USDE Index Price

The USDe lending market on Aave remains stable, with no cascading liquidations.

When analyzing Aave's related markets, we can focus on the USDe lending pool and sUSDe. Although other USDe-related assets (such as pt-sUSDe, etc.) exist on Aave, their prices are highly correlated with USDe itself, which is why the Pendle protocol's USDe principal funds are so important.

Currently, USDe's lending pool is primarily distributed across two chains: Ethereum (approximately $1.1 billion) and Plasma (approximately $750 million). Meanwhile, sUSDe's deposits on Ethereum are approximately $1 billion.

Due to the existence of a circular lending model on the chain, some users will use USDe and sUSDe as collateral to lend other stablecoins, and then redeem and pledge the proceeds as USDe and sUSDe, thereby realizing a leveraged USDe profit amplification strategy.

Aave's USDe and sUSDe revolving loan process

Judging from Aave's price feed, the USDe oracle price on the platform has consistently remained around $1, or even slightly above $1. Meanwhile, the sUSDe price feed has remained around 1.2, meaning that USDe and sUSDe borrowers on Aave have not been significantly impacted by the decoupling of Binance's USDe spot price.

Note: This analysis focuses on the lending cycle and stability performance of USDe and sUSDe. Other liquidation behaviors using mainstream assets such as BTC and ETH as collateral are not within the scope of discussion.

Aave Ethereum's USDe price feed

Aave Plasma’s USDe price feed

Aave Ethereum's sUSDe price feed

We also tracked Aave's liquidations using a third-party data analysis platform. The data shows that while Aave's overall liquidation volume reached $192 million during the market crash (October 10-11, 2025), liquidations related to USDe and sUSDe were minimal and almost negligible.

Aave's Liquidation Dune Panel

Aave’s liquidation activities can also be seen in the monitoring data of Chaos Labs, another risk analysis platform, but there are no liquidation records directly related to USDe and sUSDe.

Aave liquidation data provided by Chaos Labs

Aave’s oracle pricing and price feed logic for USDe

Aave’s pricing for USDe is not fixed at $1, but uses a combined oracle mechanism:

USDe price = Chainlink USDe/USD feed price × sUSDe/USDe internal exchange rate × CAPO (price adapter) adjustment factor

This pricing logic has been clearly stated in Aave’s official governance proposal “sUSDe and USDe Price Feed Update” and its risk analysis document.

Although some communities have proposed to "hardcode" the price of USDe to $1 (that is, directly align with USDT), the relevant plan has not yet been passed or deployed.

Therefore, Aave currently still calculates the reference price of USDe based on Chainlink's real-time price feed and sUSDe's internal exchange rate.

During the period of October 11–12, 2025, the USDe/USD price feed provided by Chainlink remained in the range of $0.992–$1.000, with extremely small overall fluctuations and no significant decoupling.

Chainlink's USDe price feed uses a multi-source aggregation and noise-removing weighting mechanism: it is not directly taken from a single exchange, but instead integrates transaction data from multiple centralized and decentralized markets, aggregates through node networks and filters out outliers to calculate a verified weighted average price (Reference Price).

This price feed is typically updated every few minutes and is widely used in collateral and liquidation calculations for protocols such as Aave.

Thanks to this mechanism, the pricing of USDe on Aave can effectively reflect its fair value in the entire market, thereby avoiding price deviations due to short-term fluctuations or liquidity imbalances on individual exchanges.

Chainlink’s USDe Price Feed

During the depegging period, there was no abnormal USDe fund flow on Binance.

No significant abnormal capital inflows were observed. Binance's USDe holdings were approximately $4.7 billion, a significant decrease of approximately $500 million from the previous $5.2 billion after the incident. This change is consistent with the overall trend of USDe's total supply decreasing from $14.6 billion to $12.8 billion .

Looking at the collateral structure, BTC positions decreased by approximately $650 million, ETH by approximately $130 million, and stablecoin assets by approximately $400 million. Overall, the decline in USDe issuance is primarily due to long position liquidations and shrinking liquidity in the derivatives market, rather than a stability attack or run on a single exchange.

Arkm's Binance assets

USDe supply changes

USDe underlying asset changes

The chronological relationship between the overall market decline and the USDe decoupling

In fact, BTC began to fall at 4:45, and major assets such as ETH and SOL also experienced a pullback during the same period. The market experienced a spike at 5:15, but at this time , USDe had not yet shown any significant decoupling.

Therefore, it can be inferred that the decoupling of USDe was not directly triggered by the overall market decline, but was more likely caused by users holding revolving loan positions on Binance selling USDe in a concentrated manner to cope with margin pressure, thereby triggering a short-term liquidity run and price decoupling.

It remains unclear whether market makers are using USDe as collateral to provide market liquidity. Based on actual testing, Binance currently only allows USDe to be deposited into margin accounts and has not yet enabled it to be used as contract collateral, potentially limiting its market-making potential.

BTC price drop icon

Analysis of ENA Systemic Risk and USDe Stability

ENA system risk-resistant structure

The total issuance of USDe under the current ENA ecosystem is estimated to be US$14 billion.

in:

About 60% (≈$8.4 billion) is the "liquid stablecoin" portion, which is mainly used for internal deployment within the protocol and circulating collateral;
Approximately 40% (≈$5.6 billion) of the stablecoin liabilities are hedged structures, of which:
BTC spot + short positions account for approximately 28% (corresponding to approximately 3.9 billion USDe issuance);
ETH spot + short positions account for approximately 11% (corresponding to the issuance of approximately 1.54 billion USDe).

This means that the stability of the BTC and ETH hedging positions directly determines the risk resistance of the entire system.

Core systemic risks

The main systemic risk of USDe lies in its effectiveness and sustainability in hedging short positions:

If the BTC/ETH short position is forced to close due to sharp market fluctuations or ADL (automatic deleveraging) triggering, the ENA protocol will lose its corresponding neutral hedging structure.
At this point, the protocol will no longer hold a hedge portfolio, but will instead hold approximately $3.9 billion in BTC long exposure.
If the market falls further by 10%–20%, USDe’s asset side will suffer actual losses, and the stablecoin will face real pressure to depeg.

In addition, the shrinking funding rates and delayed liquidation in extreme market conditions may also lead to increased losses on the asset side, which can be confirmed by the data showing a decline in the proportion of BTC in this incident.

The possibility of breaking anchor again and the key points of monitoring

USDe's market anchor is primarily determined by the exchange's order book, so if a large sell-off occurs (such as concentrated selling by whales), it may cause a short-term de-anchor even if the asset side remains healthy.

The following indicators need to be continuously monitored:

Potential impact on overall liquidity

If USDe were to actually depeg, the market impact could be close to a local liquidity crisis:

The BTC hedging position at the protocol layer fails → the risk exposure on the asset side is exposed;
LPs and borrowers in the stablecoin pool will prioritize withdrawals → accelerating the outflow of liquid stablecoins;
If a feedback chain is formed, the degree of decoupling is positively correlated with the degree of BTC decline.

BTC contract OI data

Ethena's response mechanism to ADL and exchange risks

The Ethena team has long had plans for potential ADL (automatic liquidation) and exchange system risks, and has clearly explained this in official documents.

This section mainly focuses on two scenarios:

Auto Deleveraging risk;
Exchange Failure Risk (Exchange downtime or bankruptcy risk).

Automatic Deleveraging (ADL) is a last-ditch defense mechanism used by major derivatives exchanges to mitigate systemic risk in extreme situations. When the insurance fund is depleted and unable to cover losses from margin calls, the exchange will forcibly liquidate profitable positions to eliminate risk exposure.

Ethena pointed out in the document that although ADL may theoretically lead to the passive liquidation of some hedge positions, its triggering probability is extremely low on current mainstream exchanges (Binance, Bybit, OKX, etc.) for the following reasons:

The insurance fund is sufficient in size;

The clearing system has multiple layers of risk buffer and self-healing mechanisms;

When the market fluctuates, the exchange will prioritize risk mitigation through internal matching and position-by-position risk sharing.

Even if ADL is triggered in individual venues, Ethena can quickly restore the market to a neutral state by instantly rebuilding hedge positions and actively realizing open profits and losses (realize PnL).

Overall, ADL's impact on Ethena is limited to short-term position disruption risk and does not pose a systemic threat to USDe's price anchor or asset security.

Multi-Exchange Risk Fund Carrying Capacity Assessment

Based on the distribution of Ethena’s hedging positions and the risk reserve size of major exchanges, the following calculations can be made:

As of October 11, 2025, the total daily clearing volume in the entire market was approximately US$20 billion.

Among them, the risk fund balance officially disclosed by Binance dropped by about US$200 million, and it is estimated that its risk absorption rate under extreme market conditions is about 10%.

If we calculate based on the current size of Binance’s venture fund of approximately US$1 billion, its theoretical maximum liquidation capacity under similar market conditions is approximately:

≈ $100 billion in daily liquidation volume (corresponding to a 10% risk absorption rate)

Ethena's hedging positions are distributed across multiple mainstream exchanges (Binance, Bybit, OKX, etc.), which has a significant risk diversification effect.

Estimated based on public data:

Binance: approximately $1.04 billion
Bybit: approximately $380 million
OKX: approximately US$320 million

A total of approximately US$2 billion

Under the same assumptions (approximately 10% risk absorption rate), the combined risk fund size of the three major platforms can theoretically withstand a single-day liquidation shock of approximately US$200 billion without triggering systemic risk.

This result shows that Ethena's multi-exchange hedging strategy has sufficient flexibility and defense depth in risk distribution, and even in extreme volatility, the risk of systematic liquidation (ADL) remains within a controllable range.