Ethena's synthetic stablecoin USDe has seen its supply plummet amid a surge in its fiat counterparts

Ethena's synthetic stablecoin USDe is experiencing one of the sharpest supply declines in the past month. While fiat stablecoins like USDT, USDC, and PYUSD have attracted billions of dollars in new investment, USDe has faced serious problems, impacting its market capitalization.

USDe Market Capitalization Decline

According to CoinGecko, USDe's market capitalization fell from $9.3 billion on November 1 to $7.1 billion on November 30. This means redemptions totaled approximately $2.2 billion, representing a 24% supply decline in a month. This situation is causing concern among investors and users, as the outflow of funds from USDe may indicate a loss of confidence in the asset.

Reasons for Fund Outflows

USDe is a synthetic stablecoin that maintains its peg to the dollar not through currency reserves, but through trading strategies with cryptocurrencies and futures contracts. Fund outflows from USDe can be caused by several factors:

- Token sales on the open market: Users may decide to sell their tokens, which leads to a decrease in their value.
- Withdrawals from pools: Investors may withdraw their funds from liquidity pools, which also affects supply.
- Closing positions in decentralized applications (DApps): Users may close their positions, which further reduces demand for USDe.

At the time of writing, the total stablecoin market capitalization is $311 billion, of which $303 billion is accounted for by US dollar-backed stablecoins.

Unpegged Incident

The USDe supply reduction in November followed the unpegged incident on Binance in October. At that time, the USDe price temporarily dropped to $0.65, causing panic among investors. Ethena founder Guy Yang stated that the drop was caused by an oracle issue on Binance, not a problem with the asset's collateral. He emphasized that the issuance and redemption functions for USDe tokens were working "perfectly" at the time of the incident, and approximately 2 billion tokens were redeemed on decentralized finance (DeFi) platforms.

USDe Results and Future

As of October 9, USDe's market capitalization reached $14.8 billion, making it the third-largest stablecoin. Since then, it has lost more than 53% of its market capitalization. At the time of writing, USDe's total valuation is $6.9 billion, dropping it to fourth place among stablecoins.

The situation with USDe highlights the importance of stability and trust in the stablecoin world. Investors and users should closely monitor developments to make informed decisions in a volatile market.