Following the global market turmoil triggered by President Donald Trump’s announcement of a 100% tariff on Chinese imports, Ethena’s USDE stablecoin briefly lost its $1 peg, dipping to around $0.992 before recovering close to parity.
The depeg event occurred as crypto markets faced a wave of liquidations, with billions in leveraged positions wiped out within hours. Ethena confirmed that USDE’s volatility stemmed from secondary market fluctuations and cascading futures liquidations that distorted spot and derivative market pricing.
In a statement, Ethena clarified that USDE’s minting and redemption mechanisms remain fully operational, emphasizing that the asset is still overcollateralized despite short-term volatility. “The futures basis turned negative due to liquidations, impacting realized profits, but these movements ultimately benefit the protocol,” the team explained.
Analysts attributed the temporary depeg to broader market panic rather than structural weakness in USDE’s design. However, the event highlights the fragility of algorithmic stability mechanisms during extreme market stress.
As liquidity stabilizes, USDE has largely regained its peg, trading around $0.998, but traders remain cautious amid ongoing uncertainty surrounding global trade tensions and market-wide volatility.