Ethena's USDe briefly traded as low as $0.65 on Binance during the October 10-11, 2025 market sell-off before recovering toward its $1 peg. The dislocation stayed confined to Binance — DeFi venues like Curve and Uniswap showed deviations under 0.3% — pointing to an exchange-specific liquidity problem rather than a failure of the Ethena protocol itself.
USDe, one of the largest synthetic dollar tokens in crypto, plunged to roughly $0.65 on Binance and about $0.92 on Bybit during the sell-off, even as the token barely moved on decentralized platforms.
What triggered the Binance dislocation
A thin internal orderbook on Binance distorted the exchange's oracle pricing for USDe. At the same time, deposit and withdrawal issues on the platform blocked traders from running arbitrage between the discounted token and its redeemable value — the mechanism that normally keeps a pegged token's exchange price in line.
Ethena Labs and multiple traders pointed to Binance's operational setup as the root cause of the move. The protocol's own mint and redeem functions kept working throughout the episode, processing over $2 billion in redemptions within a 24-hour window.
The protocol held up, the exchange price didn't
USDe's total supply exceeded $12 billion at the time, having peaked near or above $14 billion after heavy accumulation driven by earlier Binance reward programs. Ethena responded by publishing an emergency Proof of Reserves report showing the protocol was overcollateralized by approximately $66 million.
The broader sell-off compounded the pressure: it triggered approximately $19 billion in liquidations across the crypto market. DeFi protocols that aggregate oracle feeds from multiple sources stayed largely insulated, while venues leaning on Binance's own price data took the hit.
For USDe holders, the distinction mattered. The protocol itself processed billions in redemptions without breaking, but anyone holding the token on Binance and caught in a forced liquidation during the flash crash absorbed real losses regardless of the underlying stablecoin's health.
Source: Crypto Briefing
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