On the early morning of October 11, 2025, the world’s third-largest stablecoin USDe suddenly plummeted from around $1 to $0.65 on the Binance exchange (Binance). This de-anchoring incident lasted for nearly two hours before USDe gradually recovered. In that moment, the “decentralized dollar” with a once $14 billion market cap was put to the test by the market.
USDe is a decentralized stablecoin that attempts to create a decentralized “synthetic dollar” independent of the banking system and dollar reserves. Its high yield appeal was the starting point of its popularity and also the root cause of its de-anchoring. Compared to interest-free stablecoins, USDe’s yield can reach double digits in a bull market and even amplify to a 50% annualized return in extreme market conditions.
Compared to interest-free stablecoins like USDT or USDC, USDe’s yield can reach double digits in a bull market and even amplify to a 50% annualized return in extreme market conditions. This narrative of “risk-free arbitrage” is almost impossible to resist in the crypto market. As a result, funds rushed in.
In just a few months, especially after the U.S. “GENIUS Stablecoin Act” was passed, USDe’s market value grew rapidly, once surpassing Dai and ranking third in stablecoin market cap, becoming a “money printing miracle” in the crypto world—until the flash crash. If even the world’s third-largest stablecoin can de-anchor, are stablecoins really stable?
Since you chose to enter this casino called “stablecoins,” don’t mind getting your Chives cut.
The trigger for USDe’s de-anchoring this time was Trump’s statement about imposing a 100% tariff on Chinese imported goods, which sparked a global sell-off in risky assets and caused prices of cryptocurrencies like Bitcoin and Ethereum to plummet sharply. In this situation, USDe’s stability mechanism was tested. On one hand, the market value of collateral assets like ETH plummeted significantly, weakening the system’s safety margin. On the other hand, hedge short positions were easily liquidated due to deteriorating liquidity and amplified slippage, losing their hedging function. At the same time, investors worried about the failure of its stability mechanism and Selling off en masse USDe, forming a “stampede-style Bank run,” causing USDe to plummet from around 1 dollar to 0.65 dollars, only gradually recovering after nearly two hours.
This event is similar to the historical “Tulip Bubble,” both of which were caused by excessive speculation and market panic, leading asset prices to deviate significantly from their intrinsic value. The “Tulip Bubble” occurred in 17th-century Netherlands, where tulip prices first soared under the operation of speculators and then plummeted, negatively impacting the Dutch economy. When USDe’s price began to fall below 1 dollar, investors worried about its stability mechanism failing and Selling off en masse USDe, turning to traditional stablecoins like USDT, thus forming a “stampede-style Bank run.” The de-anchoring, which started as a technical risk, further evolved into a liquidity crisis and a trust crisis.
