Did Binance Break USDe? Ethena Says It Was Never a Depeg
As $1 billion in redemptions rippled by way of the market, Ethena Labs insists its artificial greenback, USDe, labored precisely as designed and that Binance’s personal pricing methods triggered the meltdown.
This weekend’s market saga affected all crypto sectors, with stablecoins additionally caught within the crosshairs following a supposed glitch on the world’s largest alternate.
Ethena Defends Against $1 Billion Binance Meltdown
In a detailed submit on X (Twitter), Ethena founder Guy Young pushed again towards claims of a USDe Depeg. He says the protocol’s minting, redemption, and collateral capabilities operated usually all through the market crash.
“Ethena’s mint and redeem operate had zero downtime… [the protocol processed] greater than $1 billion in withdrawals in a few hours and $2 billion in a 24-hour interval with zero points,” Young said.
According to Young, the chaos stemmed from a single venue, the Binance exchange, whose inside oracle index diverged from the deepest swimming pools of on-chain liquidity.
The alternate’s orderbook started referencing its personal spot costs as a substitute of broader market information, and USDe’s quoted worth briefly collapsed. Market makers, unable to arbitrage as a result of alternate lag and deposit freezes, had been sidelined as automated liquidations rippled by way of Binance’s unified collateral system.
Analyst Pavel Altukhov, who known as it a good storm, alleged that Binance’s unified account setup permits all belongings for use as collateral. When costs of USDe and different belongings like wBETH dropped, merchants confronted pressured gross sales to take care of margin, amplifying promote stress throughout the platform.
“Traders needed to cowl adverse PnL and meet new margin necessities, whereas their USDe did solely half the job as a result of depeg,” Altukhov wrote.
Meanwhile, different analysts questioned whether or not the occasion was a coordinated manipulation or a technical misfire. Analyst ElonTrades claimed somebody deliberately exploited Binance’s inside value feeds, realizing that the system used these costs to calculate collateral values.
For the layperson, when USDe’s value briefly fell on Binance, many DeFi cash markets (like Curve, Fluid, and others) used a “hardcoded” peg. This means they handled USDe as equal to USDT or USDC (1:1) for collateral and lending functions.
So regardless that Binance’s inside value feed confirmed USDe dipping under $1, DeFi protocols ignored that momentary drop as a result of they had been referencing a mounted peg or deep on-chain liquidity swimming pools, not Binance’s inside orderbook information.
Tether CEO Paolo Ardoino rode on the rhetoric to advocate USDT as the selection collateral for derivatives and margin buying and selling.
“USDT is the very best collateral for derivatives and margin buying and selling. Liquid, examined by fireplace. If you employ low liquidity tokens, akin to bananas, a horse, three olives, and chewed bubble gum as collateral, then brace your self when the market strikes,” he wrote.
Ethena Turns to Transparency and Oracle Reform After the Chaos
In response, Ethena has launched detailed steerage for Oracle design and danger administration. The USDe stablecoin issuer emphasizes the necessity to distinguish between “momentary dislocation” and “everlasting impairment” of collateral.
The workforce additionally affords real-time proof-of-reserves (PoR) entry to exchanges and oracle suppliers. This consists of Chaos Labs and Chainlink, to allow on-demand verification of USDe’s backing.
Industry voices largely welcomed that transparency push. Researcher Wang Xiaolou said Ethena’s strategy “is sensible.” The analyst argues that pegging USDe to USDT in DeFi markets throughout volatility helps keep away from pointless liquidations. At the identical time, PoR-based triggers can deal with true impairment if it ever happens.
Still, some analysts stay cautious, together with Duo Nine, who warned that whereas DeFi cash markets escaped unscathed this time.
“USDe misplaced peg on Binance after the crash was over. This was Binance-related, and DeFi escaped due to the hardcoded peg to USDT. Next time, the panic could begin in DeFi, and redemption velocity received’t assist. USDe stays a high-risk asset,” the analyst wrote.
Claims articulate that Ethena’s system didn’t break, and that the venue (Binance) did. However, the incident exposes a deeper structural concern. Centralized alternate information feeds can ignite systemic stress throughout an more and more interlinked CeFi-DeFi enjoying discipline.
The submit Did Binance Break USDe? Ethena Says It Was Never a Depeg appeared first on BeInCrypto.
