Key Takeaways
Why is USDe still a risk despite the isolated Binance de-peg?
The isolated de-peg triggered a broader contagion and can still happen without proper risk management. Yikes! 😱
Will the industry learn from Friday’s flash crash?
It was a necessary stress test. Don’t worry, the crypto leaders are talking about it… probably. 🤷♂️
OKX founder Star Xu has called for a reassessment of some of the risks that triggered the crypto crash on 10 October. Apparently, some things just can’t be ignored, no matter how shiny the market looks. 💥
In a bold statement, Xu singled out Ethena’s USDe, adding that its de-pegging risk could trigger a market-wide contagion, just like the Friday bloodbath. Sounds like a party no one wants an invite to. 🚨 As a result, he claims it should be treated as a “tokenized hedge fund,” not a stablecoin. Oh, the plot thickens…
“It’s important to remind the market that USDe should not be viewed as a 1:1 pegged stablecoin – it’s a tokenized hedge fund.”
Although he’s an early investor in Ethena (you know, putting his money where his mouth is), Xu believes USDe was never meant to hold a solid peg to USD. Without proper risk controls, one wrong move and everything could be toast in minutes. 🍞🔥
“Treating USDe as a simple 1:1 stable asset could introduce systemic risks to the entire crypto industry in the future.”
A painful lesson for leveraged traders
Xu’s statement was a response to a report by Ethena founder Guy Young. According to Young, last Friday’s USDe price dislocation was “not a true de-peg,” but rather a one-off event on Binance. Sure, but try telling that to the wrecked traders. 🤦♂️
USDe is supposed to track the U.S dollar. Simple, right? Well, it de-pegged and fell by 35% on Binance before crawling its way back. A slow and painful process. 😩
And the aftermath? Well, collateral fell faster than a lead balloon, triggering a full-blown bloodbath for leveraged traders. In mere minutes, $19 billion worth of positions vanished like the last slice of pizza at a party. 🍕 Gone. Poof. The largest wipeout in crypto history, making even the FTX collapse look like a mild inconvenience.
Altcoins crashed by over 90%, and to add insult to injury, Binance had issues with access, blocking market makers (MM) from swooping in to save the day. 🚧
Haseeb Qureshi, Partner at VC Dragonfly, summed up the disaster with the following:
“It’s like a fire broke out on Binance, but all of the roads were blocked and firefighters couldn’t make their way in. This caused a wildfire to break out on Binance, but pretty much everywhere else.”
Meanwhile, on-chain venues like Hyperliquid didn’t miss a beat, reacting with brutal efficiency via auto-deleveraging (ADL). Positions were forcefully closed at punitive rates, because, you know, platforms like to stay debt-free. 😈
As of now, Binance has repaid over $280M to victims during the USDe de-peg. Especially those traders who used USDe (and other coins) as collateral. Yikes, but hey, they’re getting something back. 📉💰
That being said, ENA did recover by over 10%, just like the rest of the market. But don’t get too excited-sentiment is still looking pretty red at press time. 🚦 So much for a quick recovery, huh?
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2025-10-14 08:13