Ethena's USDe Experiences $8.3 Billion Loss Since October Crash

Since the significant liquidation event on October 10, Ethena's synthetic dollar, USDe, has lost approximately $8.3 billion in net outflows. This decline is attributed to a decrease in confidence related to leveraged and synthetic collateral systems. As the overall crypto market struggles with substantial losses, USDe's market cap has dramatically decreased.

Key Takeaways

Ethena's USDe has lost about $8.3 billion in net outflows since the October liquidation event.
The October crash resulted in an estimated $1.3 trillion loss in total crypto market value.
USDe’s market cap fell from nearly $14.7 billion to around $6.4 billion in just over two months.
A temporary loss of peg occurred for USDe after the crash, attributed to an internal issue at Binance, not to the stablecoin's underlying mechanics.
Overall crypto market activity has declined, with trading volumes down about 50% since the crash.

Ethena’s USDe loses $8.3B since October crash amid ‘loss of confidence’

Main Content

Ethena's USDe, a synthetic dollar, has seen a staggering decline of around $8.3 billion in net outflows since the significant market crash on October 10. This event signal a shift in confidence regarding leveraged and synthetic collateral structures within the cryptocurrency sector.

According to a report by 10x Research, the October sell-off marked a pivotal moment for the crypto market, transitioning from a bullish trend to a time of deleveraging. This crash wiped out an estimated $1.3 trillion in overall market value, approximately 30% of the total capitalization at that time.

USDe, which operates on synthetic collateral and hedging mechanisms instead of relying on traditional fiat reserves, has encountered what analysts describe as a “sharp loss of confidence” under these troubling conditions. Data from CoinMarketCap indicates that USDe's market cap was nearly $14.7 billion as of October 9. However, in just over two months, that figure plummeted to roughly $6.4 billion.

USDe's market cap declines. Source: CoinMarketCap.

USDe's Temporary Price Depeg

After the crash on October 10, USDe briefly lost its peg, falling to around $0.65 on Binance. Ethena Labs founder Guy Young clarified that this temporary depeg was due to an internal oracle issue at the exchange, rather than any problems with the stablecoin's collateral or its mechanisms for protocol or redemption.

He noted that the minting and redemption processes for USDe functioned smoothly during the market turmoil, with approximately $2 billion redeemed in just 24 hours across prominent decentralized finance (DeFi) platforms, along with only minor price fluctuations elsewhere. As of the latest data from CoinMarketCap, USDe is trading at $0.9987.

The October 10 crash is recorded as the largest liquidation event in the history of the crypto market, with over $19 billion in crypto positions liquidated, which led to a $65 billion drop in open interest, according to data from CoinGlass.

Crypto Market Activity Slows

In the wake of the crash, overall activity within the crypto market has also diminished. Trading volumes in the crypto sector have decreased by approximately 50%. Additionally, Bitcoin exchange-traded funds (ETFs) listed in the U.S. have experienced around $5 billion in net outflows since late October.

10x Research suggests that this current market weakness is less about retail investors exiting the market and more about a conscious retrenchment by regulated capital sources. As leverage and liquidity decrease, Bitcoin has begun to trade more like a standalone risk asset rather than a macro hedge, separating itself from traditional equities and gold.