🤑 Binance Blunder or USDe’s Unstable Dance? Tolstoy Weeps! 😂

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Key Takeaways

How did Ethena’s founder react to the USDe ‘depeg’?

Ah, the founder doth proclaim with a wave of his hand, “Tis but a trifle, isolated to Binance‘s peculiar oracle!” 🧙♂️

What’s the best way to prevent the depeg?

Track external prices with liquidity so rich, even a tsar would blush. 💰

The market, that fickle beast, still reels from the 10th of October crash, a calamity that wiped out over $19 billion in leveraged positions. Among the culprits, Ethena’s [ENA] synthetic stablecoin USDe depegged, or so the peasants cry. 🌪️

During the de-leveraging frenzy, USDe plummeted to $0.65, a 35% drop, effectively depegging from its $1 throne on Binance. A tragedy, or so they say. 😱

Bybit, that prudent soul, saw only a 5% drop, while Kraken slipped by a mere 80 basis points (0.80%). A tale of two exchanges, indeed. 🤔

Ethena’s founder, Guy Young, doth declare, “This depegging is but a Binance affair, a lone wolf in a sea of liquidity!” 🦁

“I do not think it is accurate to describe this as a USDe depeg when a single venue was out of line with the deepest pools of liquidity that experienced no abnormal price deviations whatsoever.”

Why it happened

Ethena, ever the stalwart, reported that mint and redemption remained steadfast, processing over $2 billion in 24 hours. Its collateral, a princely $9 billion, stood ready for redemptions. 🏰

Young, with a flourish, noted that price dislocations on Curve [CRV], Uniswap [UNI], and Fluid [FLUID] stayed within 30 basis points, aligning with USDC-USDT spreads. “USDe’s core systems never faltered,” he proclaimed, “Binance’s pricing didst betray us!” ⚔️

A distinction of great import for leveraged traders, those gamblers of the crypto realm. 🎲

Ethena’s USDe ‘depeg’ solution

Before we delve into Young’s solution, let us ponder how depegging doth drive liquidation. A tale as old as time itself. ⏳

In leveraged trading, one must deposit collateral to open a position. With $100, a 2x long on BTC doth double thy position to $200. But alas, if the price drops, thy losses double as well. A 50% dip means thy $100 is no more. 💸

If thy fund is in USDe and it drops by 35% due to price tracking woes, thy $100 shrinks to $65. A $1 million position becomes a $350K loss. Leverage, that double-edged sword, hastens thy demise. ⚖️

Young proclaims, “Platforms tracking the most liquid and external price of USDe, like Chainlink [LINK], experienced but a whisper of discrepancy. DeFi platforms, wise in their ways, hardcoded USDe to USDT, minimizing the bloodbath.” 🛡️

Yet, USDe doth engage in basis or interest trade hunting, offering over 10% rewards to its holders. This yield hath made it the third-largest stablecoin by market cap. But beware, it is not backed 1:1 by Treasury bills like USDT and USDC. Nay, it is backed by crypto, a volatile mistress. 🌪️

The risk, like a shadow, looms over traders with leveraged positions using USDe as collateral. A cautionary tale for the ages. ⚠️

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2025-10-13 10:36