2025 saw a number of significant depeg events within the decentralized finance (DeFi) ecosystem, highlighting ongoing challenges faced by algorithmic stablecoins. These incidents primarily stemmed from liquidity crunches, market crashes, and vulnerabilities in collateralized systems. This report examines the most notable depegs of the year, offering a comprehensive breakdown.
**Key Depegging Events:**
Several major depeg events shook the DeFi landscape in 2025:
– **FDUSD (First Digital USD):** March 2025 – Dropped below $1 following rumors about reserve stability. The event marked a significant early shock to the market.
– **USDe (Ethena Labs):** October 10–11, 2025 – Fell to $0.65 on Binance during a broad crypto market sell-off. A key factor behind this was exposure to leveraged looping strategies and partially algorithmic mechanisms.
– **xUSD:** Early November 2025 – Crashed to ~$0.23 following a $128M Balancer exploit, triggering cascading failures across the ecosystem.
– **deUSD (DEUSD):** Early November 2025 – Collapsed to $0.30 or near-zero, affected by contagion from the Balancer exploit and xUSD’s collapse. Over $93M was wiped out.
– **USDX:** Early November 2025 – Fell to $0.10–$0.30 despite having unaffected reserves. This event reflected market contagion triggered by xUSD and deUSD’s collapses, leading to a crisis of confidence.
– **YB:** Mid-November 2025 – Depegged to ~$0.55. Its exact details are limited, but it is considered part of the ongoing DeFi stablecoin risk cycle.
**The November Contagion Wave:**
2025 saw a wave of interconnected depeg events in early November, collectively wiping out over $2B in market cap and contributing to a 18% decline in DeFi TVL. This cluster involved shared liquidity pools, oracle linkages, and cross-collateralized structures.
**Broader Takeaways (2021–2025):**
These events underscore that:
– Algorithmic, leveraged, and yield-bearing stablecoin designs remain highly susceptible to cascading failures.
– Even seemingly well-collateralized assets can lose their peg under extreme market stress or interdependencies within the DeFi system.
– Major stablecoins like USDT, USDC, and DAI have maintained stability throughout 2025.