Following significant market volatility in the cryptocurrency world, the USDE token within the Ethena ecosystem experienced a loss of its $1 peg. The DEPEG incident occurred shortly after Donald Trump announced 100% tariffs on China. 🇨🇳. 🇺🇸.
Ethena issued a statement regarding the impact, highlighting that secondary market volatility and widespread liquidations are contributing to the USDE’s current instability. The protocol assured its users that minting and redemption functions are operational smoothly, and that USDE remains overcollateralized.
The statement also explains the role of futures contracts in impacting USDE’s realized profits and how these positions will be addressed. As a result, the impact on USDE is said to have increased collateralization compared to the day prior. Ethena pledged to provide further updates as developments unfold.
*This is not investment advice.*