Etana’s yielding stablecoin USDe temporarily lost its 1:1 dollar peg during the recent market selloff triggered by US President Donald Trump’s announcement of 100% tariffs on China.
On Binance, USDe fell to 65 cents, but quickly returned to parity with the dollar during the event, which is considered the largest liquidation event in crypto history in terms of USD value. More than $19 billion in liquidations occurred in just 24 hours.
USDe currently offers holders a yield of 5.5%, is backed by a variety of cryptocurrencies, and employs a basis trading strategy, a financial setup that aims to profit from price differences between spot and futures markets.
President Trump’s shocking announcement sent investors fleeing to safe-haven assets such as gold and U.S. Treasuries.
Cryptocurrency trader and economist Alex Krueger said the drop in USDe had a huge impact, while tokens that were less actively traded on centralized exchanges “didn’t suffer as much” and some recovered quickly from the drop.
This is because exchanges like Binance and Bybit marked prices close to real-time trading, while lending protocols like Aave hard-coded USDe to $1, protecting them from some of the immediate effects of short-term declines.
Ethena Labs said in a social media post that USDe remains overcollateralized and widespread liquidations are impacting USDe’s secondary market price.
“We can confirm that the minting and redemption functions continue to operate across the board without experiencing any downtime, and USDe remains overcollateralized,” Ethena Labs wrote in a post.
“Due to the liquidation, perpetual contracts have been trading below spot and continue to trade. This will result in additional windfall uPNL within USDe as Ethena is shorting these contracts, but is currently in the process of being realized to the benefit of the protocol,” the project added.
Binance said it is considering liquidating the affected accounts, along with “appropriate compensation measures.”
Ethena’s governance token, ENA, fell by 40% on the decline before starting to recover. It has fallen nearly 25% in the past 24 hours.
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