Unlike traditional stablecoins that rely on direct fiat or asset backing, USDe employs derivative hedging strategies to maintain its U.S. dollar peg. It uses Bitcoin (BTC), Ether (ETH), Solana (SOL), and other crypto assets as collateral, with an arbitrage-based system for minting and redeeming tokens. Additionally, USDe generates yields through a cash-and-carry strategy.
However, this approach introduces certain risks. USDe’s exposure to derivatives markets, exchange counterparty risk, and collateral volatility could potentially affect its peg stability during adverse market conditions.
On Aug. 5, amid a broader crypto market selloff, USDe faced a stress test with nearly $100 million in redemptions. While the stablecoin briefly dipped to $0.997, it quickly recovered to its $1 target.
Sorry to see this much pain across the board
On the Ethena side I can confirm there are zero issues with >$50m of redemptions processed overnight which is the largest to date
The backing assets and reserve remain at >101% v USDe supply per the attestation reports linked below: pic. .com/02yP5tb298
— G | Ethena (@leptokurtic_) August 5, 2024
On Sept. 18, Ethena Labs temporarily deactivated its frontend due to a security breach involving its domain registrar account.