The USDe artificial greenback depegged on the Binance crypto alternate attributable to an inside oracle challenge and never due to the underlying collateral, the Ethena protocol, or the token itself, in line with Man Younger, the founding father of Ethena Labs, the creator of USDe.
USDe minting and redeeming labored “completely” throughout Friday’s flash crash, he claimed; $2 billion in USDe was redeemed throughout 24 hours throughout crypto exchanges, together with Curve, Fluid, and Uniswap, with minimal worth deviations of 30 foundation factors (BPS) or much less, Younger stated.
The value of USDe fell from about $1 to $0.65 on Binance throughout the crash as a result of the alternate was utilizing oracle information from its personal orderbook, which had thinner liquidity, slightly than an exterior worth feed, Younger stated. He added:
“The extreme worth discrepancy was remoted to a single venue, which referenced the oracle index by itself orderbook, not the deepest pool of liquidity, and was dealing with deposit and withdrawal points throughout the occasion, which didn’t enable market makers to shut the loop.”
“Nobody would have been liquidated on any cash market with oracles referencing the deepest swimming pools of liquidity for USDe globally,” he stated.
The market crash on Friday triggered the largest 24-hour liquidation occasion in crypto historical past, making a cascade that wiped away $20 billion in open leveraged positions, which may solely symbolize the tip of the iceberg when it comes to monetary injury, some merchants say.
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Merchants speculate whether or not USDe depeg was a coordinated assault
Crypto dealer ElonTrades speculated that the USDe depegging occasion on Binance was a coordinated assault that exploited the “Unified Account” characteristic on Binance that lets customers publish property like USDe as collateral.
This characteristic makes use of Binance’s personal orderbook information as a substitute of exterior worth oracles, which ElonTrades described as a “main vulnerability” and a problem the alternate introduced it will repair by October 14 by pivoting to information from exterior oracles.
The attackers took benefit of this time window, dumping as much as $90 million of USDe on Binance, reducing its worth to $0.65 on the alternate, and igniting a torrent of liquidations on the platform as much as $1 billion.
On the identical time, the attackers opened up quick positions on Bitcoin (BTC) and Ether (ETH) on the Hyperliquid perpetual futures decentralized alternate, minutes earlier than Friday’s tariff announcement from US President Donald Trump despatched merchants into full-blown panic and crypto markets right into a meltdown.
The attackers then netted about $192 million in revenue from their quick positions, because the contagion from the Binance exploit unfold by crypto markets, liquidating about $20 billion attributable to a $100 million place, ElonTrades speculated.
The liquidation occasion prompted Kris Marszalek, CEO of the Crypto.com alternate, to name for an investigation of exchanges that skilled giant losses.
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