Ethena's yield-bearing stablecoin, USDe, briefly lost its 1:1 dollar peg during a sharp market sell-off triggered by U.S. President Donald Trump's announcement of a 100% additional tariff on China. The event resulted in over $19 billion in liquidations within 24 hours, marking one of the largest crypto liquidation events in U.S. dollar value history.
On Binance, USDe dropped to as low as 65 cents before quickly recovering to near parity, with the depeg attributed to cascading futures liquidations that distorted spot and derivative market pricing. Ethena Labs confirmed in a social media post that USDe remains over-collateralized and that mint and redeem functionalities were operational throughout, with no downtime. The protocol noted that perpetual contracts traded below spot due to liquidations, creating unexpected unrealized profits that benefit the system.
Ethena's governance token, ENA, fell by up to 40% during the slide and is down nearly 25% over 24 hours. Binance is reviewing affected accounts and considering compensation measures. Analysts, including crypto trader Alex Krüger, highlighted that less actively traded tokens suffered less, but the event underscores the fragility of algorithmic stability mechanisms under extreme market stress. USDe has since largely regained its peg, trading around $0.998, though traders remain cautious amid ongoing global trade tensions.
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