Ethena Founder Issues Clarification on USDe Stability

Guy Young, the founder of Ethena Labs, the entity behind USDe, said the depegging event on Binance, which dropped the token's value to $0.65, was an isolated issue. 

Friday’s market crash wiped out nearly half a trillion dollars from the crypto market cap, with over $19 billion in leveraged positions liquidated. 

USDe Depeg Was Due To An Oracle Issue 

Guy Young, the CEO of USDe creator Ethena Labs, clarified that the USDe depeg on Binance occurred due to an internal oracle issue and not because of the underlying collateral. Young claimed that USDe minting and redeeming worked perfectly during Friday’s market crash, adding that traders redeemed $2 billion in USDe from various exchanges with minimal price deviations. Young stated that USDe fell from $1 to $0.65 on Binance during Friday’s crash because the exchange was using oracle data from its own orderbook, which offered thinner liquidity. Young had stated, 

“The severe price discrepancy was isolated to a single venue, which referenced the oracle index on its own orderbook, not the deepest pool of liquidity, and was facing deposit and withdrawal issues during the event, which did not allow market makers to close the loop. No one would have been liquidated on any money market with oracles referencing the deepest pools of liquidity for USDe globally.”

The Disruption On Binance 

USDe’s drop created panic within the crypto community, with traders believing the stablecoin had depegged across the market. However, data revealed that the crash was confined to Binance, with prices stable on other trading platforms. Young clarified that the event was “isolated to a single venue,” highlighting that Binance faced deposit and withdrawal issues. 

A Coordinated Attack?

Traders had speculated whether the depegging was part of a coordinated attack to exploit the “Unified Account” feature on Binance, which allows users to post assets, including USDe, as collateral. The feature uses Binance’s own order book instead of external price oracles. Many traders have described this as a major vulnerability. Binance had stated it would address the issue by October 14 and migrate to data from external oracles. 

Traders believe attackers took advantage of this window and dumped up to $90 million in USDe on Binance, lowering its value to $0.65 on the platform, leading to nearly $1 billion in liquidations. The attackers then opened short positions on Bitcoin (BTC) and Ethereum (ETH) on Hyperliquid, minutes before President Trump’s tariff announcement, which sent markets into meltdown. 

Binance Paid $283M In Compensation 

Binance reportedly paid around $283 million in compensation to users of three assets, including USDe. Executives apologized to users after Friday’s market crash, which caused three assets in Binance Earn markets, Ethena's stablecoin USDe, Binance-issued Solana liquid staking token BNSOL, and Wrapped Beacon liquid staking token WBETH to depeg. The exchange compensated futures, margin, and loan users who held USDE, BNSOL, or WBETH as collateral, and were impacted by the crash between 21:36 and 22:16 UTC.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.