Ethena’s USDe Stablecoin Briefly Loses Dollar Peg Amid Massive Market Liquidation

Ethena’s yield-bearing stablecoin, USDe, temporarily slipped from its 1:1 dollar peg, dropping to $0.65 on Binance during a massive market sell-off triggered by U.S. President Donald Trump’s announcement of a 100% tariff increase on Chinese imports. The sudden policy shock sent global markets reeling and fueled over $19 billion in crypto liquidations within just 24 hours—marking one of the largest liquidation events in crypto history.

USDe, which currently offers a 5.5% annual yield, is backed by a diversified mix of cryptocurrencies and operates on a basis trade strategy that profits from price discrepancies between spot and futures markets. However, the rapid market volatility caused a temporary dislocation in USDe’s value.

According to crypto economist Alex Krüger, the impact was particularly harsh for highly traded assets like USDe. In contrast, less liquid tokens “didn’t suffer as much” and some even recovered more quickly. Exchanges like Binance and Bybit adjusted USDe prices in real time, while DeFi protocols such as Aave, which had USDe hardcoded at $1, were largely shielded from immediate price distortions.

Ethena Labs responded swiftly, assuring users that USDe remained over-collateralized and that both minting and redemption functions were fully operational throughout the turmoil. The project explained that ongoing liquidations in perpetual contracts had temporarily depressed futures prices below spot, inadvertently creating unrealized profit and loss (uPNL) favorable to USDe holders.

Meanwhile, Binance announced it is reviewing affected accounts and potential compensation measures. Ethena’s governance token, ENA, tumbled nearly 40% during the crash, though it has since recovered partially, remaining down roughly 25% over the past 24 hours.

This brief depegging highlights the risks of yield-bearing stablecoins in volatile markets, even those with robust collateralization and sophisticated hedging strategies.