The USDe stablecoin, developed by Ethena Labs and constructed to remain pegged to $1, depegged briefly to about $0.65 on Binance over the weekend, raising concerns that it had lost its peg.
However, Guy Young, Founder of Ethena Labs, clarified that the drop was due to issues on the Binance exchange, not a failure of the stablecoin itself. Young said that the crash was confined to Binance only. USDe’s minting and redemption mechanisms worked perfectly fine, processing more than $2 billion in withdrawals over 24 hours without any interruption.
Young pointed out that main liquidity platforms like Curve, Uniswap, and Fluid experienced negligible price fluctuations, less than 0.3%. Exchanges with proper on-platform minting and external oracles also saw minimal liquidations or collateral issues.
According to Young, this highlights that USDe remained fully backed and functional, and that price dislocations on certain exchanges were due to infrastructure limitations rather than any problem with the stablecoin itself.
He added that over $9 billion of stablecoin collateral was immediately available for redemption, though only a fraction was used. USDe acted as a wrapper on USDT and USDC, so even large redemptions could happen without unwinding complex positions. Young also explained that oracles need to detect temporary price dislocations versus permanent collateral impairment.
The extreme price drop on Binance was due to its thin order book and deposit/withdrawal issues, not a problem with USDe. He said calling this a “USDe depeg” would be misleading, as liquidity pools elsewhere remained stable.
What experts say
The market turmoil came amid a broader global sell-off. On Friday, President Trump announced a 100% tariff on Chinese imports and stricter export controls, which triggered massive liquidations in crypto. Over $19 billion in leveraged positions were wiped out, affecting 1.6 million traders, while equities, oil, and other risk assets also fell sharply.
Crypto analyst Haseeb clarified that USDe did not truly depeg. The main liquidity venue is Curve, where hundreds of millions of dollars in liquidity remained stable, while Binance holds only a fraction.
Haseeb said the sharp drop on Binance was due to exchange-specific problems. Binance didn’t have a direct link with Ethena; its oracle used only its thin order book, and deposit/withdrawal issues blocked traders from stabilizing prices. Other exchanges and USDe on Curve stayed around $1.
Haseeb explained that this episode was a “Binance-specific flash crash,” not a failure of USDe itself. He contrasted it with USDC’s depeg in 2023, where the stablecoin lost its peg across all platforms and redemptions were halted. “USDe was fully collateralized and worth $1 on its primary venue through the entire episode,” he said.
Meanwhile, crypto trader ElonTrades explained that the Binance USDe drop was a group attack taking advantage of the exchange’s “Unified Account” system that enables users to list assets such as USDe as collateral. This system relied on Binance’s own order book instead of external oracles, creating what he called a “major vulnerability.”
According to ElonTrades, the attackers dumped up to $90 million of USDe on Binance, pushing its price down to $0.65. This triggered around $1 billion in liquidations.
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