Friday’s de-pegging of Ethena’s USDe rocked crypto markets and came as if out of the blue. With more than 72 hours to gather intel and reflect on what went on, here’s our post-mortem of the bloodbath that day — and what it augurs for DeFi resilience and delta-neutral strategy stablecoins more broadly. You can listen to the related Spaces chat here.
Anatomy of a crash
On Friday, October 10, what began as a localized pricing dislocation on a centralized exchange spiraled unexpectedly into a “crypto bloodbath”.
The result? Nearly $20 billion was wiped from crypto market capitalization in less than 24 hours, as cascading liquidations led to the temporary de-pegging of a key decentralized stablecoin.
While Bitcoin held up comparatively well, the shockwaves through DeFi and stablecoin markets exposed newfound fragility in crypto’s plumbing.
Adding to the intrigue, a mysterious whale is said to have profited handsomely from shorting the market within minutes of the crash, making out with close to a $1 billion.
For some, all this was evidence of structural weakness, which will inevitably invite regulatory responses; for others, a stress test that the system passed with flying colors.
At the center of the drama, in any case, was USDe, a so-called delta-hedged stablecoin that briefly traded below its $1 peg — a concept most hadn’t even heard of until the weekend.
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