During yesterday’s market crash, Ethena’s stablecoin USDe fell to as low as $0.65 on Binance.
Following this sharp decline, Ethena Labs released an official “Proof of Reserves” report in response to community concerns.
According to the company, USDe’s reserve status is typically verified weekly by independent third-party auditors Chaos Labs, Chainlink, Llama Risk, and Harris & Trotter. However, due to the extraordinary market movements of the past 24 hours, Ethena released updated reserve proof at an unusually timely time, following community demand.
According to data shared by Ethena, USDe is still backed by approximately $66 million in additional collateral. The company argued that this demonstrates its commitment to maintaining transparency and trust.
Meanwhile, industry commentary has reignited debate about USDe’s suitability for the “stablecoin” definition. Conflux (CFX) co-founder Forgiven stated that USDe is actually a financial certificate or asset management product, stating, “USDe is not a stablecoin, but a fund certificate pegged to a net asset value of $1 thanks to a revaluation mechanism.” According to Forgiven, the “USDe is a stablecoin” narrative is a deliberate marketing strategy aimed at broadening the product’s use cases.
Similarly, Formula News founder Vida suggested that forced liquidations by USDe arbitrageurs may have been the source of yesterday’s decline. According to Vida, this reduced USDe’s collateral capacity, triggering market maker positions and leading to chain liquidations.
*This is not investment advice.