The USDe synthetic dollar was unpegged on the Binance cryptocurrency exchange due to an internal oracle issue and not due to the underlying collateral, the Ethena protocol, or the token itself, according to Guy Young, founder of Ethena Labs, and creator of USDe.
He claimed that the minting and redemption of the US dollar (USDe) worked “perfectly” during Friday’s flash crash. $2 billion in US dollars were redeemed within 24 hours across cryptocurrency exchanges, including Curve, Fluid and Uniswap, with minimum price deviations of 30 basis points (BPS) or less, Young said. He said.
Young said the price of USDe fell from about $1 to $0.65 on Binance during the crash because the exchange was using oracle data from its order book, which had less liquidity, rather than feeding external prices. He added:
“The extreme price discrepancy was isolated to one place, which pointed to an oracle in its order book, not the deepest liquidity pool, and had deposit and withdrawal issues during the event, which did not allow market makers to close the loop.”
“It would not have been possible to liquidate anyone in any money market with Oracle pointing to the deepest USD liquidity pools globally,” he said.
Friday’s market crash led to the largest 24-hour liquidation event in cryptocurrency history, creating a cascade that wiped out $20 billion of leveraged open positions, which can only represent the tip of the iceberg in terms of financial damage, some traders say.
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Traders are speculating whether the USDe correction is a coordinated attack
Cryptocurrency trader ElonTrades forecast The USDe delinking event on Binance was a coordinated attack that took advantage of the “unified account” feature on Binance that allows users to post assets like USDe as collateral.
The feature uses Binance’s own order book data instead of external price data, which ElonTrades described as a “major security vulnerability” and an issue that the exchange announced it would fix by October 14 by focusing on data from external oracles.
The attackers exploited this time window, dumping up to $90 million worth of USDe on Binance, dropping its price to $0.65 on the exchange, and sparking a torrent of liquidations on the exchange amounting to $1 billion.
At the same time, attackers opened short trades on Bitcoin (BTC) and Ethereum (ETH) on the decentralized exchange for perpetual Hyperliquid futures, minutes before US President Donald Trump announced tariffs on Friday, sending traders into a full-blown panic and sending cryptocurrency markets into a meltdown.
The attackers then made profits of about $192 million from their short positions, with the infection from the Binance exploit spreading across cryptocurrency markets, leading to the liquidation of about $20 billion due to a $100 million position, ElonTrades predicted.
The liquidation prompted Chris Marszalek, CEO of the Crypto.com exchange, to call for an investigation into the exchanges that suffered significant losses.
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The post Ethena Founder Says USDe Depeg Due to Binance Oracle Issue first appeared on Investorempires.com.
