Ethena’s USDe Briefly Loses Peg During $19B Crypto Liquidation Cascade

Ethana’s yield-bearing stablecoin, USDe, briefly lost its 1:1 dollar peg during the recent sharp market sell-off triggered by U.S. President Donald Trump’s announcement of a 100% additional tariff on China.

On Binance, USDe dropped to 65 cents before quickly regaining parity with the dollar during what’s seen as crypto’s largest ever liquidation event in U.S. dollar value. More than $19 billion in liquidations occurred over just 24 hours.

USDe, which currently offers a 5.5% yield to holders, is backed by a mix of cryptocurrencies and uses a basis trade strategy, a financial setup that aims to profit from price gaps between spot and futures markets.

Trump’s shock announcement sent investors fleeing to safe havens like gold and U.S. Treasuries.

USDe’s dip had outsized effects, according to crypto trader and economist Alex Krüger, as tokens that aren’t as actively traded on centralized exchanges “didn’t suffer as much” and some quickly recovered from the drop.

This is as exchanges like Binance and Bybit marked the price closer to real-time trading, while lending protocols like Aave had USDe hardcoded it at $1, which shielded them from some of the immediate impact of the brief depew.

Ethena Labs said in a social media post that USDe remains over-collateralized and that widespread liquidations affected the secondary market price of USDe.

“We can confirm the mint & redeem functionality has remained operational throughout with no downtime experienced, and USDe remains overcollateralised,” Ethena Labs wrote in the post.

“Due to liquidations perpetual contracts have been and continue to trade below spot. This creates additional unexpected uPNL within USDe, due to Ethena being short these contracts, which is currently in the process of being realised to the benefit of the protocol,” the project added.

Binance has said it’s reviewing affected accounts and liquidations, along with the “appropriate compensation measures.”

Ethena’s governance token, ENA, fell as much as 40% during the slide before it started to recover. It’s down nearly 25% in the last 24-hour period.