Ethena Labs founder Guy Young has argued that the dramatic drop in the price of its synthetic dollar USDe on Binance was caused by a Binance-specific oracle and market-structure problem, not by any failure of the USDe protocol itself. On October 10–11, USDe briefly traded as low as around $0.65 on Binance’s spot market during a period of sharp market-wide volatility, triggering forced liquidations and giving the appearance of a major depeg. At the same time, USDe traded close to its intended $1 value on on-chain venues such as Curve and on other centralized exchanges, and Chainlink’s USDe/USD oracle feed remained in the $0.99–$1.00 range. This divergence suggested that the stress was localized to Binance’s internal order books and pricing systems. Young and other analysts attribute the episode to how Binance handled pricing and risk, particularly its reliance on its own order book and a misconfigured internal oracle for liquidations instead of referencing deeper external liquidity for USDe. According to post-mortems, thin liquidity on Binance, aggressive forced liquidations, and oracle behavior that responded to the local crash rather than broader market prices amplified selling pressure and caused a temporary “flash crash” in USDe on that venue. Ethena’s core mechanisms, including its delta-neutral hedging strategy and on-chain mint–redeem flows, reportedly continued to function normally, processing large redemptions without delays and maintaining full collateralization throughout the event. Binance has since acknowledged anomalies around the incident and introduced risk-control and pricing changes, as well as a compensation plan for affected users. The episode is now widely framed as an exchange-specific dislocation that exposed centralized exchange oracle and liquidation design weaknesses rather than a structural failure of USDe or the Ethena protocol.

AI-generated background, compiled from web sources — not editorial content.

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