SS #39 - Ethena USDe Survives Market Stress, Binance Oracle Failure to Blame

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GM everyone. That was quite the flush we saw over the weekend. We hope you navigated the volatility safely and weren't too badly affected by the rapid deleveraging.

That massive sell-off did, however, expose some serious issues, particularly on the stablecoin side. Ethena’s synthetic dollar, USDe, famously dipped to just $0.65 on Binance. The good news? The protocol's core mechanics held up. We can all breathe a sigh of relief because on the DEXes like Curve, where USDe holds its deepest liquidity, the peg stayed perfectly fine. No Luna 2.0 scenario here. The trouble wasn't confined to USDe, either; similar depegs hit wBETH and BNSOL on the Binance platform as well. The exchange has committed to reviewing accounts individually to compensate users who lost funds due to these specific, technical failures.

To all of you reading this, our loyal Stablescope subscribers, we wish the best to our crypto friends impacted by the crash. No matter what chaos hits the market, you can count on us to keep covering the news and delivering the facts directly to your inbox.

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In Today's Edition:

• Headline: Ethena USDe Survives Market Stress, Binance Oracle Failure to Blame

• Quick Bites: Binance to Compensate Users Affected by Crash in wBETH, BNSOL, and Ethena’s USDe

• Yield of the Week: 133.91% APY on Hyperwave

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HEADLINE

Ethena USDe Survives Market Stress, Binance Oracle Failure to Blame

State of play: Ethena’s yield-bearing synthetic dollar, USDe, briefly dropped to $0.65 on Binance, the world’s largest exchange, during a major market liquidation event, but the protocol's mechanics remained sound.

• The severe drop was confined to Binance, which lacked direct dealer relationships and failed to reference the deepest liquidity pools for its oracle, causing a flash crash.

• Despite the event occurring during a $19B liquidation spree, USDe maintained its peg on (DEXs) like Curve and remained overcollateralized by $66M.

• The core issue was Binance’s faulty infrastructure, its reliance on an illiquid internal order book for liquidations. It is not a failure of USDe’s cash-and-carry arbitrage redemption mechanism.

What’s Next: Binance must urgently revise its oracle and liquidation systems, potentially integrating direct dealer support for USDe. Ethena will use this stress test to accelerate its secure integration with other CEXs, mandating stricter security and liquidity requirements. The industry will now prioritize auditing CEX oracle systems against robust DEX standards.

Why it Matters: This incident provided a critical stress test, proving that USDe's redemption and collateral mechanisms work under extreme market volatility. It highlights the superior stability and reliable price discovery of decentralized liquidity pools over isolated CEX order books.

Our Take: This was an operational failure by a centralized venue, reinforcing that traders must verify stablecoin prices against deep DEX liquidity. The strategic opportunity lies in optimizing arbitrage infrastructure to profit from these isolated price dislocations.

QUICK BITES

• Strata mainnet is live.

• Antalpha leads $150M Aurelion financing to establish Tether Gold treasury.

• Ethereum stablecoin activity. hits new highs as weekly unique senders top 1M.

• Tether CEO Paolo Ardoino says Bitcoin and gold will outlast any other currency.

• Binance to compensate users affected by crash in wBETH, BNSOL, and Ethena’s USDe.

• Bank of America, Goldman Sachs and other big banks 'jointly exploring' a stablecoin.

YIELD OF THE WEEK

Hyperwave HLP: 133.91% APR

• The Hyperwave HLP uses the established "boring-vault" standard, which has been rigorously tested and currently secures approximately $3.5B in TVL across various vaults.

• The associated asset, hwHLP, offers users flexible minting options, accepting a range of collateral including stablecoins, BTC, ETH, and the native HYPE token on either HyperEVM or the Ethereum network.

• Redemptions are typically completed within one day, provided the hwHLP vault has sufficient liquidity. However, in cases of low liquidity, the process involves converting USDC from the Hyperliquidity Provider Vault (HLP) and swapping it for other stable assets, extending the final redemption period up to five days.

Drift hJLP 2X: 15.05% APY

• The hJLP 2x strategy aims to amplify returns from the Jupiter Liquidity Pool by using 2x leverage while simultaneously neutralizing price risk through short positions in the underlying assets (SOL, ETH, BTC) on Drift Protocol.

• While the 2x leverage enhances potential liquidity provision yields and reduces volatility, net returns are impacted by ongoing stablecoin borrow fees incurred by the strategy.

• The vault is non-custodial and passively managed, but deposited funds are subject to a mandatory 3-day redemption period, during which any accrued upside profit is forfeited. A 30% performance fee is applied to profits by Gauntlet under specific quarterly or action-based conditions.

Euler Frontier Falcon USDT/USDC: 24.66%-281.7% APY

• Euler enables leveraging USDT as collateral, borrowing USDC up to 16.65x to maximize yield.

• With a max LTV of 94%, the liquidity in this pool is up to $4.57M.

• Users can either borrow USDC against USDT collateral or utilize leverage to long USDT and short USDC.

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Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.