USDe Analysis during the Oct 10th-11th Volatility Event
Executive Summary
Oct 10, 2025 saw a sharp, broad-based selloff across digital assets, with elevated liquidations and forced deleveraging in derivatives. Our focus here is how USDe behaved during this important stress test, through an analysis of centralized exchanges, decentralized ones and lending markets.
- Context: The market saw a severe volatile event, in line with others registered in the past in percentage terms, with the total market cap of crypto losing $850B in value out of $4.08T (21%) and open interest diminishing by $38B.
- CEX vs DEX behavior: USDe printed a transient discount on Bybit and Binance, trading respectively at 0.92 and at 0.65 due to an oracle mismanagement before normalizing, while on-chain pools on Ethereum and Plasma maintained a tight peg around 0.99. While flows remained CEX-centric, with DEX accounting for ~23% of total volume, we do see a more consistent price action in the latter despite a more complex and interconnected ecosystem.
- AAVE & collateral risk: We observed no material liquidations on AAVE attributable to positions collateralized by USDe or sUSDe during the event window.
- Redemptions: USDe processed approximately $1.2B in redemptions in an orderly fashion through the stress period out of an $8.6B market cap, testifying how the stablecoin is not only widely used, but resilient to volatility periods.
- Key takeaway: With USDe’s circulating supply now in the mid‑teens of billions and ranking among the top three stablecoins by market value, multi‑hundred‑million to billion‑dollar flow magnitudes during volatility is within expectations for a mature instrument. The onchain DeFi lego system did show resilience, with only $50K in liquidations in AAVE for USDe and sUSDe and a healthy peg in DEXs, and a redeem event compatible with a broad market liquidity recall into USDC and USD.
Market Context (Oct 10th, 2025)
Spot markets sold off sharply, and derivatives open interest (OI) reset across BTC, ETH, and altcoins. Spot market dropped by 21%, losing around ~$850B out of $4.08T of value. While severe, this percentage decline is in line with others in the past.
As a comparison, during the blowup of FTX the drop was around 17% in a single day, moving the total market cap of crypto from $0.97T to 0.81T, while during covid contagion the drop was around 42%, with the industry moving from $0.22T to $0.13T.
Derivatives, specifically perps and futures, also saw a sharp decline.
- BTC saw an Open Interest decline of 25%, from $43.6B to $32.7B
- ETH saw an Open Interest decline of 30%, from $27B to $18.9B
- Alt saw an Open Interest decline of 45% from $33.4B to $18.3B.
The drop in OI is compatible with normal liquidation events, with ETH market having 20% more OI decline and ALTs having 72% more OI decline compared to BTC OI decline.
BTC and ETH OI change. Source: coinanalyze
As stated above, while severe, the current drop in the market, likely fueled by Trump’s commentary on China’s tariff, is in line with other events seen in the past and should be expected going forward.
USDe Performance offchain and onchain: CEX, DEX and Lending Markets
USDe printed a meaningful intraday discount on a few centralized venues as traders likely rotated into dollar‑denominated collateral (USDT/USDC and USD) to meet margin calls and reduce basis exposure. The dislocation was brief in time but rather deep on the Binance USDe/USDT market which, on $2B volume, saw a decline up to 0.65 per USDT, mostly caused by Binance using its own order book as the only oracle for USDe pricing, a mechanism explicitly recognized as inappropriate for the asset and that has led to compensation for affected users. The quotes normalized as liquidity returned, with USDe being below the 0.9 mark for 23 minutes, below the 0.95 mark for 53 minutes and below the 0.99 mark for 86 minutes.
Binance USDe/USDT 1 min chart. Source: tradingview
It’s important to highlight for context how USDC was also under pressure against USDT, printing 0.993 in the same exchange: the broad sell-off impacted all assets.
Quite a different picture for onchain activity. On DEXs the peg of USDe in major pools on Ethereum and Plasma has stayed quite tight, with an average price of 0.99 in major pools on Fluid, Curve, Uniswap against USDT, USDC and GHO. Notably, the Fluid USDe/USDT pool processed north of $400M in volume, with the total onchain volume around $0.79B, 30% of the $2.6B volume on CEX.
Across our monitored dashboards, we did not observe meaningful liquidations directly attributable to USDe or sUSDe collateral usage during the event window. Out of the +$170M liquidated, we saw a total of $19K for USDe and $28K for sUSDE, showing how the oracle solution implemented was indeed strong enough to avoid unnecessary liquidations. Even though using a pure onchain oracle, we would have likely not seen meaningful liquidations, given that the price onchain reached a low in the most important pools of around $0.99.
Liquidation on AAVE per asset. Source: Blockworks
USDe Redemption Flows
Approximately $1.9 billion in USDe redemptions were processed between the 10th and the 11th of October. This number is, useless to say, quite a test for an asset having $14.6B as initial market cap. Ethena was able to withstand an orderly redemption of more than 13% of its assets, We did not observe signs of mechanical stress or a backlog; the Reserve Fund has remained unutilised, and as per request of the community Ethena has published a Proof of Reserve outside the normal publication cycle.
Key Takeaways
Beside the obvious market effects, the event has been an extremely important stress test and highlighted several factors.
First, there is a bifurcation between CEX activities and the overall onchain ecosystem, with the latter performing way better than the former. It has been made clear that the main culprit behind the Binance liquidations has been the setup of the internal oracle based only on their own internal orderbook; Binance has already stated that it will change the mechanism by adding to a weighted index the redemption pool price and a minimum threshold. That said, the complex of DEX - Lending markets - Redemption for USDe did operate as usual despite the tremendous financial load on it, with the anchoring to the USDT oracle being a key part of the experience and the liquidity in pools acting as first stop buffer into meaningful conversions, especially the Fluid USDe/USDT pool on Ethereum.
AAVE, and subsequently Pendle, did not see any material liquidation except for a total slightly below $50K for USDe and sUSDe: E-mode and PT looping did withstand the storm.
Finally, the redemption mechanism has shown extreme resilience. While it was for $1.6B in a single day and $1.9B in the two days before and after the crash, it is likely realistic to consider that the bulk of this redemption happened in less than a few hours. The size of it highlighted not only the mechanism working, but how USDe is, indeed, a very important asset in the industry, acting as backstop during liquidation events to source other collaterals at time of need.