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

Ethena's yield-bearing stablecoin, USDe, briefly lost its dollar peg, dropping to 65 cents on Binance during a sharp market sell-off following U.S. President Donald Trump's announcement of increased tariffs on China. The stablecoin quickly recovered, and Ethena Labs confirmed that its mint and redeem functionality remained operational, and it is still over-collateralized. The incident sparked significant market volatility, with Ethena's governance token, ENA, falling by 40% before recovering. In the wake of the sell-off, exchanges like Binance noted substantial liquidations amounting to $19 billion within 24 hours. USDe, which offers a 5.5% yield, is supported by a combination of cryptocurrencies and employs a strategy to profit from price gaps in different markets. Despite the impact of the tax announcement, USDe maintained its over-collateralization and liquidity measures in place to stabilize its value amidst the turmoil.

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