Ethena's USDe stablecoin temporarily deviated from its $1 valuation amid a widespread crypto market sell-off exceeding $19 billion.

USDe Stablecoin Depeg

Ethana’s USDe stablecoin briefly lost its dollar peg during a market downturn triggered by new tariffs on China. The price dropped to 65 cents on Binance before recovering, coinciding with over $19 billion in liquidations—a significant event in the crypto market. USDe offers a 5.5% yield and utilizes a basis trade strategy.

Market Reaction and Protection

Investors sought safe havens like gold and U.S. Treasuries following the announcement. Less actively traded tokens experienced less severe drops, while some lending protocols shielded themselves through hardcoded pricing. Exchanges like Binance helped to mark the price closer to real-time values.

Ethena's Response and Account Review

Ethena Labs confirmed USDe remains over-collateralized and mint/redeem functionality remained operational. Liquidations impacted perpetual contract pricing and resulted in unexpected profit/loss within the protocol. Binance is reviewing affected accounts and considering compensation.

ENA Token Performance

Ethena’s governance token, ENA, experienced a substantial decline, falling as much as 40% during the slide. The token has since partially recovered but remains down nearly 25% in the past 24 hours. The impact of liquidations continues to be assessed by the project.