USDe Loses $8.3B After October Crash as Investors Flee Synthetic Stablecoins
Ethena’s synthetic stablecoin USDe lost about $8.3 billion in market capitalization following the October 10 crypto crash, falling from a combined reference of roughly $14.7 billion on October 9 to about $6.4 billion by December. The decline reflects a broad investor retreat from leveraged, synthetic collateral models amid a large deleveraging wave that erased significant market value. During peak volatility USDe briefly depegged to about $0.65 on Binance due to an exchange oracle issue, though Ethena said minting and redemption mechanics continued to operate and roughly $2 billion of USDe was redeemed across DeFi platforms within 24 hours. The episode triggered large liquidations, a sharp drop in derivatives open interest and roughly $5 billion in net outflows from U.S. spot Bitcoin ETFs since late October, contributing to halved trading volumes and contracted TVL for Ethena. Analysts and Ethena’s founder cited the oracle glitch and USDe’s synthetic, leveraged hedging model as sources of vulnerability compared with fiat-backed stablecoins (USDT/USDC). The peg has mostly recovered to near $0.9987, but rebuilding trust will likely require clearer stress testing, diversified collateral and greater transparency. Traders should monitor stablecoin reserve models, exchange liquidity and derivatives open interest as leading indicators of further deleveraging or stabilization.
Bearish
The news is bearish for USDe. The loss of roughly $8.3B in market cap, the short-lived 0.65 depeg on Binance, and massive redemptions indicate acute counterparty and model risk specific to the synthetic, leveraged structure of USDe. Short-term price pressure is likely as redemptions, reduced TVL and halved trading volumes persist; traders may continue to sell or avoid holding USDe during further volatility. Medium-term stabilization is possible if mint/redemption mechanics and peg restoration continue, but confidence rebuilding will take time and requires demonstrable stress tests, diversified collateral and transparency. Compared with fiat-backed stablecoins, USDe’s structural vulnerabilities make repeated sell pressure and tighter spreads on secondary markets more likely until reserves and risk controls are visibly strengthened. Monitor exchange liquidity, derivatives open interest and ETF flows for signals of further deleveraging or recovery.