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Crypto project Ethena’s yield-bearing stablecoin USDe briefly lost its dollar peg during a market rout that triggered record liquidations.
USDe, which is marketed as a “synthetic dollar” and currently offers holders a 5.5% yield, fell to 65 cents against the dollar on Binance.
The token is designed to maintain a price close to that of the US dollar, which it regained shortly after the initial selloff.
Cryptocurrencies tumbled after US President Donald Trump said he would impose an additional 100% tariff on China, sparking a rush for safe haven assets including gold and Treasuries.
Over the past 24 hours, more than $19 billion of bullish crypto bets have been wiped out, with more than 1.6 million traders liquidated, according to Coinglass data.
“Our team is currently conducting a thorough review of the impacted users, the details surrounding these liquidations, and the appropriate compensation measures,” Binance said in a blog post about USDe and two other tokens that lost their pegs.
USDe boasts a market value of $14 billion, making it the third-largest digital dollar. Ethena Labs said in a post on X that the token remains over-collateralized.
The USDe token is backed by a reserve of digital assets, including stablecoins like USDT and USDC. Ethena uses a version of the basis trade for its stablecoin, which exploits price discrepancies in spot and futures markets, to generate yield.
When crypto markets are booming and funding rates — the interest paid by bullish traders to take on leverage for futures bets — are high, the mechanism Ethena relies on can translate into sky-high yields. But that gets tested during massive selloffs.
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