USDe Depeg Explained: Binance’s Pricing System Failure Triggers $19B Market Crash

USDe, a yield-bearing synthetic stablecoin from Ethena Labs, briefly lost its dollar peg during extreme market volatility in October. This occurred due to a liquidity collapse on Binance and the impact of their pricing system failure, rather than a structural flaw in the USDe protocol itself. The event exposed how exchange oracles and margin systems amplify liquidation cascades and destabilize assets across the broader crypto market. Binance’s $283 million compensation plan and USDe’s swift recovery calmed investor anxieties, but this incident has prompted scrutiny regarding synthetic stablecoin models.