Since the massive Oct. 10 liquidation, Ethena’s synthetic dollar USDe has seen roughly $8.3 billion in net outflows — a stark sign of waning confidence in leveraged and synthetic collateral models. What happened - The Oct. 10 crash was a watershed moment for crypto. According to 10x Research, the sell-off flipped the market from a bull phase into a period of broad deleveraging, wiping out an estimated $1.3 trillion in crypto market value — nearly 30% of total capitalization at the time. - That liquidation wave was the largest in crypto history: CoinGlass reports more than $19 billion in positions liquidated and around $65 billion knocked off open interest. USDe under pressure - Ethena’s USDe — a stablecoin backed by synthetic collateral and hedging strategies rather than traditional fiat reserves — suffered a “sharp loss of confidence” as markets convulsed, 10x Research noted. - USDe’s market cap plunged from about $14.7 billion on Oct. 9 to roughly $6.4 billion in just over two months. - During the crash, USDe briefly lost its peg on Binance, dropping to about $0.65. Ethena Labs founder Guy Young attributed that episode to an internal oracle issue at the exchange, not to flaws in USDe’s collateral, protocol, or redemption mechanics. - Ethena says minting and redemptions operated normally during the turmoil, with roughly $2 billion redeemed in 24 hours across major DeFi venues. CoinMarketCap lists USDe trading near $0.9987 at the time of writing. Wider market fallout - Market activity has thinned since the crash: crypto trading volumes are down roughly 50%, and U.S.-listed spot Bitcoin ETFs have seen about $5 billion in net outflows since late October. - 10x Research argues the current weakness is driven less by retail capitulation and more by a deliberate retrenchment of regulated capital. As leverage and liquidity retreat, Bitcoin has decoupled from equities and gold and is trading more like an isolated risk asset than a macro hedge. Why it matters - The episode illustrates how synthetic collateral structures can be especially vulnerable during extreme market stress, and how execution issues at intermediaries (like exchange oracles) can compound instability. - For investors and protocol builders, the fallout underscores renewed scrutiny on liquidity, redemption mechanics, and the operational integrity of counterparties during systemic events. Bottom line: The Oct. 10 liquidation accelerated a marketwide deleveraging that exposed vulnerabilities in synthetic stablecoins like USDe and reshaped capital flows — a cautionary moment for leveraged players and a test case for how DeFi primitives behave under pressure. Read more AI-generated news on: undefined/news

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