Ethena (ENA) team responds to widespread market worries.

crypthub

about 7 hours ago

USDe's Market Decline and Response

Ethena’s stablecoin USDe experienced a significant drop to $0.65 on Binance during yesterday’s market crash. In reaction to community apprehension, Ethena Labs quickly released a “Proof of Reserves” report. The report detailed that USDe’s reserves are usually audited weekly by multiple firms, with an accelerated update released due to market volatility. USDe remains backed by approximately $66 million in extra collateral, according to the company.

Debate Over USDe’s Classification

Industry discussion has questioned whether USDe aligns with the traditional "stablecoin" classification. Some, like Conflux co-founder Forgiven, argue it functions more as a financial certificate or asset management product. This perspective asserts that the “stablecoin” label is a marketing tactic aimed at broader adoption. The debate centers on the underlying mechanism and its deviation from typical stablecoin models.

Potential Causes of the Price Drop

The recent decline in USDe's value has triggered scrutiny of potential contributing factors. Formula News founder Vida suggests that forced liquidations by arbitrageurs played a crucial role. These liquidations reportedly diminished USDe’s collateral capacity and impacted market maker positions. Such events further contributed to chain liquidations and the observed price downturn.