As $1 billion in redemptions rippled via 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.
Sponsored
Ethena Defends In opposition to $1 Billion Binance Meltdown
In an in depth publish on X (Twitter), Ethena founder Man Younger pushed again in opposition to 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 function had zero downtime… [the protocol processed] more than $1 billion in withdrawals in a few hours and $2 billion in a 24-hour period with zero issues,” Younger mentioned.
In line with Younger, the chaos stemmed from a single venue, the Binance alternate, 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 because of alternate lag and deposit freezes, had been sidelined as automated liquidations rippled via Binance’s unified collateral system.
Analyst Pavel Altukhov, who referred to as it an ideal 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 compelled gross sales to take care of margin, amplifying promote stress throughout the platform.
“Traders had to cover negative PnL and meet new margin requirements, while their USDe did only half the job due to the depeg,” Altukhov wrote.
Sponsored
In the meantime, 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 worth feeds, understanding that the system used these costs to calculate collateral values.
Somebody deliberately manipulated Binance’s inside spot costs for belongings like USDe, wBETH, and BNSOL, understanding that the Unified Account system used these costs to calculate collateral worth.
As you mentioned – “I do not think it is accurate to describe this is a USDe depeg when a…
— ElonTrades (@ElonTrades) October 12, 2025
For the layperson, when USDe’s worth briefly fell on Binance, many DeFi cash markets (like Curve, Fluid, and others) used a “hardcoded” peg. This implies they handled USDe as equal to USDT or USDC (1:1) for collateral and lending functions.
USDe (Curve) vs USDC (Binance). Supply: Younger on XSponsored
So despite the fact that Binance’s inside worth feed confirmed USDe dipping beneath $1, DeFi protocols ignored that non permanent drop as a result of they had been referencing a set 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 best collateral for derivatives and margin trading. Liquid, tested by fire. If you use low liquidity tokens, such as bananas, a horse, three olives, and chewed bubble gum as collateral, then brace yourself when the market moves,” 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 “temporary dislocation” and “permanent impairment” of collateral.
Sponsored
The staff 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.
Business voices largely welcomed that transparency push. Researcher Wang Xiaolou mentioned Ethena’s method “makes sense.” The analyst argues that pegging USDe to USDT in DeFi markets throughout volatility helps keep away from pointless liquidations. On the similar time, PoR-based triggers can handle true impairment if it ever happens.
Nonetheless, some analysts stay cautious, together with Duo 9, who warned that whereas DeFi cash markets escaped unscathed this time.
“USDe lost peg on Binance after the crash was over. This was Binance-related, and DeFi escaped thanks to the hardcoded peg to USDT. Next time, the panic may start in DeFi, and redemption speed won’t help. USDe remains a high-risk asset,” the analyst wrote.
Claims articulate that Ethena’s system didn’t break, and that the venue (Binance) did. Nevertheless, the incident exposes a deeper structural challenge. Centralized alternate information feeds can ignite systemic stress throughout an more and more interlinked CeFi-DeFi enjoying subject.
