Ethena’s USDe Briefly Depegs to $0.65 Amid $19B Crypto Liquidation — Quickly Recovers

Ethena Labs’ yield-bearing stablecoin, USDe, briefly lost its dollar peg during one of the largest liquidation events in crypto history — but swiftly regained parity, maintaining full collateralization throughout.

On October 11, a surprise announcement by U.S. President Donald Trump — unveiling a 100% tariff on Chinese imports — triggered a market-wide sell-off that erased billions across digital assets. Within 24 hours, over $19 billion in leveraged positions were liquidated, marking one of crypto’s sharpest downturns to date.

During the turmoil, Ethena’s USDe — a stablecoin designed to maintain a 1:1 peg with the U.S. dollar — fell as low as $0.65 on Binance before recovering within hours. Despite the panic, Ethena Labs confirmed that USDe’s mint and redeem functions stayed fully operational throughout the event.

Overcollateralization and On-Chain Stability

Ethena Labs emphasized in a statement that USDe remained overcollateralized, with no interruption to its protocol’s core functions. The team explained that the rapid depeg was primarily a secondary market effect caused by extreme liquidations, not a failure in the protocol itself.

“We can confirm the mint & redeem functionality has remained operational throughout with no downtime experienced, and USDe remains overcollateralised,” the team wrote on X (formerly Twitter).

USDe operates using a basis trade strategy, hedging exposure between spot and futures markets while offering holders an annual yield around 5.5%.

The event also impacted Ethena’s governance token, ENA, which plunged nearly 40% before partially rebounding. Meanwhile, Binance and Bybit announced reviews of affected accounts and potential compensation measures for users impacted by the flash depeg.

Analysts like Alex Krüger noted that the fallout highlighted how price feeds differ across exchanges, with decentralized protocols like Aave being partially insulated due to hardcoded $1 pricing.

Despite the shock, USDe’s quick recovery and Ethena’s transparent communication helped rebuild confidence in the project’s design — a critical test for one of DeFi’s most innovative stablecoin systems.

Disclaimer

This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.