Ethena, a major player in the stablecoin and decentralized finance space, has emerged relatively unscathed in the recent hack of Bybit, one of the world’s largest cryptocurrency exchanges.
While the potential risks to USDe are still unfolding, Ethena has sought to reassure its community that USDe’s PnL and collateralization levels remain unaffected by the hack. Indeed, the run on the Ether market that the Bybit hack has triggered seems to have bypassed USDe, with Ethena managing to keep its decentralized dollar stable throughout the market turbulence of the last week.
Large Redemption and Unstaking Show Confidence in USDe
On February 21, 2025, Ethena marked its biggest-ever USDe redemption, coming in at $123 million. While that figure might sound big, it only represents a small sliver—about 2%—of the total supply of USDe, which is now $6 billion. All of that makes the redemption seem even more impressive, if not a little alarming. My understanding is that the necessary funding was in place and that the redemption didn’t put a strain on the system.
A significant $248 million in USDe was unstaked from the platform’s staking contract. This sum is three times greater than the next largest single-day unstaking amount. The driving force behind this unstaking was the PSM3 contract, which withdrew $202 million in USDe on February 21. This gargantuan unstaking was by no means a coordinated effort. Rather, it was largely the result of one or more whales choosing to unstake a significant amount of USDe from the platform. The effect of this unstaking on the platform was that the staking ratio of USDe decreased from 67% to 63.5%.
Even with the large amount of unstaking, there is a bright side to all of this. The annual percentage yield (APY) on sUSDe, a version of USDe, has risen to 9.15%—greater than the saving’s rate of USDs, which sits at 8.75%. This increase in APY is a testament to the resilience of USDe as an investment vehicle, even with sUSD facing some serious headwinds from the market overall.
Stable Market Performance and Growing Confidence
Even though the market experienced a bit of roughness on February 21, when USDe briefly fell to $0.98, the stablecoin has shown real resilience. The median traded price of USDe across decentralized exchanges (DEXs)—where much of the USDe trading occurs and where USDe should have very poor price performance if it were an illiquid asset—held at a strong price of $0.9993. This translates to a very small deviation of -0.07% from its peg with the US dollar and demonstrates the robustness of USDe.
One extraordinary development is the trading volume on decentralized exchanges. Here, USDe experienced its largest daily selling volume at $203 million on February 21. The buying volume was $180 million, which means there was some selling pressure but that confidence in USDe remained steady overall. @0xfluid emerged as a key player, responsible for a sizable portion of USDe and sUSDe trades. He (or it) accounted for 53 percent of the sUSDe trading volume in February and 20% of the USDe trading volume.
The breach at Bybit, a major exchange for USDe trading, caused USDe balances on centralized exchanges (CEXs) to plummet. They fell from $580 million to $388 million—a drop of 33%. Yet this was more than offset by an increase in USDe on other platforms; deposits on the Ethereum-based @etherealdex jumped from $163 million to $430 million (an increase of 163%). And a user made a serious deposit of $182 million USDe on February 23, showing that confidence in both Ethena (the @etherealdex platform) and USDe remains strong.
Ethena has announced that the massive hack on Bybit has no impact on USDe’s PnL and Collateralization.
Now that the dust has settled, let’s explore the ramifications using our @dune dashboards. https://t.co/zZfRsAKdaP
— Tom Wan (@tomwanhh) February 24, 2025
Effective Risk Management Through CopperHQ and Insurance Fund
Ethena’s demonstrated resilience in the face of the Bybit hack is mostly a reflection of its strong risk management framework. At the heart of this framework is a partnership with CopperHQ, which offers ClearLoop. ClearLoop is a system that allows users to post collateral in a way that does not require them to deposit the asset onto a centralized exchange. This is a very clever first line of defense against a problem that is, in essence, a hack of a centralized exchange. It is very much in line with the ethos of decentralized finance—guarding your asset in a manner that does not require you to trust a single point of failure.
Ethena has an Insurance Fund to cover any potential losses from unforeseen events, in addition to ClearLoop. Although there was an unsettled $30 million PnL on Bybit, the Insurance Fund has not been required, as Bybit has already settled the PnL. Ethena appears committed to maintaining a high level of collateralization, evident in the platform’s USDe currently being 101% overcollateralized, per its transparency page. For anyone concerned about potential risks related to unhedged positions, Ethena’s monthly attestation report, which typically is released at the end of each month, should provide additional clarity.
Looking Ahead: Ethena’s Growth and Future Plans
Even though the revenue has slightly decreased because of the declining funding rates, Ethena’s liquidity and total value locked (TVL) have remained stable. The platform keeps pushing forward and has several exciting new initiatives in the works—most notably, potentially launching a fee switch for sENA holders and introducing iUSDe, a new product that will offer institutional-grade stability.
A $100 million funding commitment from two of the world’s largest asset managers—Franklin Templeton and Fidelity—has propelled Ethena into the financial stratosphere. These developments do not just give Ethena an air of credibility and potential for growth; they make it a real contender in the race to provide retail and institutional investors with innovative fintech solutions.
To conclude, Ethena has displayed solid risk management and resilience, despite the market situation and the recent hack of Bybit. The platform maintains a clearly stated commitment to overcollateralization; it offers users competitive yields that make it a stable and fairly attractive decentralized finance option. Ethena has a number of big developments cooking that could significantly expand its offerings and user base. From where I sit, its future appears quite bright.
Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.
Follow us on Twitter @nulltxnews to stay updated with the latest Crypto, NFT, AI, Cybersecurity, Distributed Computing, and Metaverse news!
Image Source: gregorylee/123RF // Image Effects by Colorcinch
Source: https://nulltx.com/ethena-shows-resilience-amid-bybit-hack-and-major-usde-redemption/