During a market sell-off triggered by Trump’s tariff announcement, Ethana’s yield-bearing stablecoin, USDe, briefly lost its 1:1 dollar peg, dropping to 65 cents on Binance before recovering. The event led to over $19 billion in liquidations in just 24 hours, marking the largest ever liquidation event in U.S. dollar value.

USDe, offering a 5.5% yield, is backed by a mix of cryptocurrencies and uses a basis trade strategy to profit from price gaps. Trump’s announcement caused investors to flock to safe havens like gold and U.S. Treasuries, impacting USDe’s value.

USDe’s dip had outsized effects as less actively traded tokens on centralized exchanges didn’t suffer as much. Exchanges like Binance and Bybit marked the price closer to real-time trading, while lending protocols like Aave had USDe hardcoded at $1, reducing the immediate impact of the drop.

Ethena Labs confirmed USDe remains over-collateralized despite widespread liquidations affecting its secondary market price. The mint and redeem functionality remained operational with no downtime, while liquidations caused perpetual contracts to trade below spot, creating unexpected uPNL within USDe.

Binance is reviewing affected accounts and liquidations, promising appropriate compensation measures. Ethena’s governance token, ENA, fell up to 40% during the slide but has started to recover, down nearly 25% in the last 24 hours.

Read more at Yahoo Finance: Ethena’s USDe Briefly Loses Peg During $19B Crypto Liquidation Cascade