"USDe depegging collapse, causes were leverage liquidations and Binance withdrawal restrictions"

The USDe stablecoin (a crypto asset whose value is pegged to fiat currency) temporarily fell to 0.66 dollars on the 11th, experiencing a severe depegging event. The causes pointed to leverage liquidations, lack of liquidity, and Binance's withdrawal restrictions.

On the 13th, Beonmo said on X (formerly Twitter) that USDE had rapidly grown since its listing on Binance last September by running a promotional annual 12% interest-rate promotion on loan products such as ▲VIP loans (3.5x leverage), ▲Easy Lending (3.5x), and ▲leverage trading (up to 5x), and that "however, during the major crash over the past weekend, depegging occurred and a cascade of liquidations was triggered." He added, "In this process VIP loan users did not suffer major damage, but there were many cases where leverage trading users suffered total losses."

Beonmo explained, "The sharp drops in Bitcoin and Ethereum forced many whale accounts' positions to be liquidated, causing large-scale selling between USDe and USDT," and "thereby USDe's price fell below 0.91 dollars, then broke the 0.82-dollar liquidation zone for 5x leverage loans and plunged to 0.66 dollars."

Beonmo also pointed out that "Binance restricted withdrawals at the time due to a surge in Ethereum network fees, blocking USDe's on-chain redemption (mint-redeem) path," and "this measure worsened liquidity depletion and triggered additional plunges."

Beonmo said, "This incident shows that centralized exchanges' infrastructure constraints can spread into stablecoin system risk," and emphasized, "Exchanges should establish their own redemption mechanisms to prevent liquidity crises in the future."